South Korea’s parliament yesterday approved a bill to boost the country’s semiconductor industry by giving firms tax breaks to spur investments.
The legislation known as the K-Chips Act would increase the tax credit to 15 percent from the current 8 percent for major companies investing in manufacturing facilities, while the tax break for smaller and medium-size firms would go to 25 percent, up from the 16 percent.
The measure is expected to boost domestic investment for South Korean tech companies such as Samsung Electronics Co and SK Hynix Inc.
Photo: Reuters
The act had backing from lawmakers across party lines, with 179 members voting in favor and 13 opposed.
Nearly 40 lawmakers at parliament forfeited their vote, while nearly 70 did not take part in the ballot. South Korean President Yoon Suk-yeol has indicated he would approve the bill.
To prop up the economy and stand out in the global race for tech supremacy, Yoon early this month announced a US$422 billion investment into key areas such as chips and electric vehicles, including plans for hubs housing chipmaking plants.
With the new parliament bill and government incentives, Seoul is hoping to maintain its global semiconductor technology leadership or even overtake Taiwan when it comes to the business of making logic chips for others.
The tech sector is a major driver of South Korea’s trade-reliant economy, accounting for about 12 percent of total exports last month.
With global semiconductor demand in a slump, the economy contracted in the final three months of last year, and the current quarter also looks challenging as exports fall further.
Samsung and Hynix are the world’s two largest memorychip makers, while Samsung is the world’s second-largest contract manufacturer of logic chips by market share, trailing Taiwan Semiconductor Manufacturing Co (台積電).
Memory chips, which store data, are relatively simple and are traded like commodities. Logic chips, which run programs and act as the brains of a device, are more complex and expensive.
Adding to the pressure for South Korean chipmakers, US President Joe Biden’s administration is seeking help from its global partners to impose sweeping curbs on the sale of advanced chip equipment to China in a policy aimed at preventing the country’s progression in a range of cutting-edge technologies that could threaten the US’ status as the world’s pre-eminent power.
South Korean companies won a one-year reprieve from sweeping US export controls unveiled in October last year that prevent chipmakers from bringing in equipment for their advanced facilities in China. Without a license extension, it is unclear how Samsung and Hynix would proceed. Both depend on China as a key market and a manufacturing site for their memory chips.
Separately, the Biden administration announced so-called guardrails to restrict new investment for chip operations in China for companies that would get federal funds to build in the US.
The South Korean government has said the new restrictions would not prohibit technology upgrades at its chipmakers’ factories in China, adding that it is discussing the matter with US counterparts.
US politicians have said that they need to do more than just hold back China.
Last year’s CHIPS and Science Act would provide about US$50 billion of federal money to support US production of semiconductors and foster a skilled workforce for the industry.
BUSINESS UPDATE: The iPhone assembler said operations outlook is expected to show quarter-on-quarter and year-on-year growth for the second quarter Hon Hai Precision Industry Co (鴻海精密) yesterday reported strong growth in sales last month, potentially raising expectations for iPhone sales while artificial intelligence (AI)-related business booms. The company, which assembles the majority of Apple Inc’s smartphones, reported a 19.03 percent rise in monthly sales to NT$510.9 billion (US$15.78 billion), from NT$429.22 billion in the same period last year. On a monthly basis, sales rose 14.16 percent, it said. The company in a statement said that last month’s revenue was a record-breaking April performance. Hon Hai, known also as Foxconn Technology Group (富士康科技集團), assembles most iPhones, but the company is diversifying its business to
ARTIFICIAL INTELLIGENCE: The chipmaker last month raised its capital spending by 28 percent for this year to NT$32 billion from a previous estimate of NT$25 billion Contract chipmaker Powerchip Semiconductor Manufacturing Corp (力積電子) yesterday launched a new 12-inch fab, tapping into advanced chip-on-wafer-on-substrate (CoWoS) packaging technology to support rising demand for artificial intelligence (AI) devices. Powerchip is to offer interposers, one of three parts in CoWoS packaging technology, with shipments scheduled for the second half of this year, Powerchip chairman Frank Huang (黃崇仁) told reporters on the sidelines of a fab inauguration ceremony in the Tongluo Science Park (銅鑼科學園區) in Miaoli County yesterday. “We are working with customers to supply CoWoS-related business, utilizing part of this new fab’s capacity,” Huang said, adding that Powerchip intended to bridge
Microsoft Corp yesterday said that it would create Thailand’s first data center region to boost cloud and artificial intelligence (AI) infrastructure, promising AI training to more than 100,000 people to develop tech. Bangkok is a key economic player in Southeast Asia, but it has lagged behind Indonesia and Singapore when it comes to the tech industry. Thailand has an “incredible opportunity to build a digital-first, AI-powered future,” Microsoft chairman and chief executive officer Satya Nadella said at an event in Bangkok. Data center regions are physical locations that store computing infrastructure, allowing secure and reliable access to cloud platforms. The global embrace of AI
Qualcomm Inc, the world’s biggest seller of smartphone processors, gave an upbeat forecast for sales and profit in the current period, suggesting demand for handsets is increasing after a two-year slump. Revenue in the three months ended in June will be US$8.8 billion to US$9.6 billion, the company said in a statement Wednesday. Excluding certain items, earnings will be US$2.15 to US$2.35 a share. Analysts had projected sales of US$9.08 billion and earnings of US$2.16 a share. The outlook signals that the smartphone market has begun to bounce back, tracking with Qualcomm’s forecast that demand would gradually recover this year. The San