11 hours Ago By Korea Bizwire
On February 27, South Korea’s National Assembly approved the so-called “K-Chips Act,” granting tax incentives to semiconductor companies investing in factory expansions and infrastructure. (Yonhap) SEOUL, Feb. 27 (Korea Bizwire) — South Korea’s National Assembly passed the so-called ‘K-Chips Act’ on February 27, expanding tax benefits for semiconductor companies in a move aimed at strengthening the nation’s global competitiveness in chip manufacturing.
The legislation comes at a crucial time as geopolitical uncertainties, including the new U.S. administration’s trade policies, add pressure to the industry.
Under the revised tax code, large and mid-sized semiconductor firms will see their tax credit for facility investments rise from 15% to 20%, while small and medium-sized enterprises (SMEs) will see an increase from 25% to 30%. The semiconductor industry has become a cornerstone of both economic growth and national security, prompting countries to ramp up incentives to attract investment. The U.
S. currently offers a tax credit of up to 25% for companies building semiconductor plants under the CHIPS Act, while Taiwan provides a 25% tax credit for research and development (R&D) in semiconductors. “The implementation of the K-Chips Act will enhance South Korea’s global semiconductor competitiveness by alleviating investment burdens,” said Lee Geon-jae, an analyst at IBK Investment & Securities.
“With increased tax credits, domestic firms can focus more on facility expansion and R&D.” An employee working at a semiconductor fab (factory) (Image courtesy of SK hynix) Economic organizations welcomed the passage of the K-Chips Act, emphasizing its role in reinforcing the semiconductor ecosystem. The Korea Chamber of Commerce and Industry (KCCI) hailed the bill as a catalyst for technological and manufacturing advancements, urging swift approval of a separate Semiconductor Special Act currently under parliamentary review.
“This measure will not only improve the technological capabilities and production capacity of South Korean semiconductor firms but also accelerate a positive investment cycle, strengthening the overall industry,” said Lee Jong-myung, head of the KCCI’s Industry Innovation Division. Industry leaders also stressed the need for additional legislative support. The Federation of Korean Industries (FKI) highlighted the growing risks associated with trade protectionism and geopolitical instability under the new U.
S. administration, emphasizing that the K-Chips Act would help mitigate economic uncertainties. “The passage of this amendment is a lifeline for the industry amid intensifying trade barriers and geopolitical risks,” said Lee Sang-ho, head of FKI’s Economic and Industrial Policy Division.
“Expanding tax credits for semiconductor production and R&D will provide a crucial stepping stone for our firms to emerge as global technology leaders.” The Korea Employers Federation (KEF) echoed these sentiments, calling for further government support to ensure South Korean firms remain competitive with global rivals. “This legislation will drive investment in strategic sectors such as semiconductors and artificial intelligence (AI), boosting industrial competitiveness while reinvigorating the economy,” KEF stated.
The Korea International Trade Association (KITA) also emphasized the importance of the bill, noting that it provides much-needed relief amid rising global trade tensions. “With U.S.
tariff policies evolving and the economic impact of China’s deep-sea shipping crisis, the expanded semiconductor tax credit is a welcome development for South Korean exports,” KITA said in a statement. This photo provided by Samsung Electronics Co. shows the company’s semiconductor production facility in Pyeongtaek, south of Seoul.
(Image courtesy of Yonhap) Despite the passage of the K-Chips Act, business groups continue to push for additional measures, including subsidies and labor regulation reforms under the Semiconductor Special Act. “The government and legislature should continue introducing bold policies to ensure South Korean firms remain competitive against global rivals,” KEF stated. “We urge lawmakers to pass the Semiconductor Special Act swiftly, including provisions for subsidies and labor flexibility.
” With the new tax incentives in place, South Korea is positioning itself to remain a key player in the fiercely competitive semiconductor sector, ensuring the industry’s sustainable growth amid global market shifts. M. H.
Lee ([email protected]).
