South Korea’s proposed Special Act for Strengthening Competitiveness and Promoting Innovation in the Semiconductor Industry, known as the “Semiconductor Special Act,” has collapsed amid political gridlock over an exemption to the 52-hour workweek. The Democratic Party of Korea (DPK) opposed the measure, citing concerns for labor unions. DPK lawmakers argued that work-hour restrictions are not the root cause of the industry’s challenges. However, evidence suggests otherwise.

A Korea Chamber of Commerce and Industry survey found that three out of four companies reported a decline in research and development (R&D) outcomes since the 52-hour cap was implemented. Without flexibility, South Korea risks following the same path as Japan’s semiconductor decline three decades ago.

Taiwan Semiconductor Manufacturing Co. (TSMC), Samsung’s top competitor, faced a similar crisis a decade ago when it fell behind in foundry technology. In response, TSMC launched the “Nighthawk Project,” running R&D operations around the clock. This strategy was instrumental in propelling TSMC to the top of the global semiconductor market.

The TSMC logo is displayed at the TSMC Museum of Innovation in Hsinchu, Taiwan, on May 29, 2024./Reuters Yonhap News

The DPK says it will focus on improving power grids, water supply, roads, and workforce development—key infrastructure for the semiconductor sector. Yet this overlooks the industry’s unique demands. The 52-hour workweek issue is not a minor detail but a core concern. Semiconductor development involves billions of won in investments, and even after a product is completed, unexpected issues or client requests often require immediate, around-the-clock responses. Delays can mean losing market opportunities.

Industry leaders argue that flexibility in the 52-hour rule is more critical than subsidies or tax incentives. The current proposal limits the exemption to semiconductor R&D roles, ensuring that total working hours do not increase and requiring labor-management agreements. Despite this, the DPK continues to side with unions, who claim any exemption would undermine the entire 52-hour system.

A reasonable compromise would be to implement a three-year trial exemption for semiconductor R&D. If, during this period, unions’ concerns about deteriorating labor conditions prove valid, the exemption could be revised or revoked.

DPK Chairman Lee Jae-myung recently stated, “The Democratic Party has always been an economy-focused party,” adding, “If you don’t adapt to a changing world, you’re a fool.” His words could just as easily apply to his own party. If the DPK truly wants to demonstrate economic leadership, it should at least consider a limited, experimental exemption to support South Korea’s semiconductor competitiveness.