Samsung, like other semiconductor chip manufacturers, is going through a downturn. It recently posted its lowest-ever profit in 14 years, all because of the low chip demands across the globe and the chip division's first-ever loss in 14 years. Now, the South Korean government has entered the scene. It has vowed to spare no effort in supporting local semiconductor manufacturers.
Do note that these local chipmakers are the backbone of Asia's fourth-largest economy. The South Korean government will provide various incentives and tax cuts to the semiconductor manufacturers, including Samsung, to boost their profits and also help them stay afloat amid the industrywide slump.
The new bill will raise the tax credit rate for conglomerates to 15% from the current 8%
Finance Minister of South Korea, Choo Kyung-ho said, “Chips act as the brain for cutting-edge industries including artificial intelligence and future mobility.” This announcement of support for the local chip manufacturers comes as a sigh of relief for the industry. As exports of chips reached $8.59 billion in March 2023, which was down by 34.5% YoY.
The Korean government has passed a revised ‘Act on Restriction of Special Taxation' bill, which is also called the ‘K-Chips Act'. This bill mainly focuses on expanding the tax credit rate for semiconductor manufacturers, as reported by The Korea Times. Thanks to this new bill, the tax credit rate for conglomerates will rise from the current 8% to 15%. On the other hand, small and medium-sized businesses will see a jump to 25% from the current 16%.
Finance Minister Choo also said that the government is ‘highly evaluating' Samsung's decision to spend KRW 300 trillion (roughly $227.3 billion) over the next 20 years for a new semiconductor cluster, despite the uncertainty in the industry. This new chip cluster will be built in Yongin, which is 40 kilometers south of Seoul.
