South Korea Industry Minister Says Corporate Profits Should Be Reinvested First

South Korea’s industry minister said the first priority in using corporate profits should be “productive reinvestment,” as debate intensifies over how to deploy windfall gains from the semiconductor boom. The remarks underscore support for reinvestment over distribution from the cabinet official overseeing the chip sector.

Trade, Industry and Energy Minister Kim Jung-kwan laid out that view in a Facebook post on May 29 titled “Now Is the Golden Time for Investment for South Korea’s Great Leap Forward.” “This is a critical moment to connect profits generated by the semiconductor industry to productive reinvestment for the future,” he wrote.

Kim raised the risk that South Korea could fall behind in the global race for supremacy in artificial intelligence and semiconductors if it loses focus. “Competition in the AI era will be decided by overwhelming speed and scale,” he wrote. “Even a single missed investment opportunity could collapse the industrial ecosystem and drive our companies onto a loser’s path from which recovery would be difficult.”

He sharpened the warning in the same post. “The moment the pace of investment and innovation slows, leadership over the future will pass to other countries,” Kim wrote. “What is needed now is not hesitation but resolve, and not dispersion but concentration.” He added that South Korea must not become complacent about its current competitiveness and that today’s profits should become the financial resources for tomorrow’s overwhelming edge.

Officials in and around the government see Kim’s remarks as pushing back against Employment and Labor Minister Kim Young-hoon, who recently argued that excess profits at large corporations should be distributed. Kim Young-hoon told reporters on May 27 that he would hold a forum and begin social dialogue on how to distribute excess profits at big companies.

A day earlier, Kim Young-hoon wrote on Facebook that the public, as sovereign, does not want to stand by and watch widening gaps among workers. The proposed forum has since been put on hold after criticism that the government was trying to take away corporate profits.

The presidential office also acknowledged the need for a broader public discussion on how to use excess profits from semiconductors. Kang Yu-jung, senior presidential spokesperson, said at a briefing on May 28 that the labor minister’s remarks referred to the need to distribute gains from the standpoint of labor policy. If the industry minister were speaking, she added, he would talk about excess operating profit or earnings from the standpoint of industry.

Park Jong-gwan, Hankyung.com reporter pjk@hankyung.com