The ruling party in South Korea has proposed a bill to provide subsidies to chip manufacturers and waive national working hours restrictions in response to potential risks posed by measures threatened by incoming US President Donald Trump.
The semiconductor industry is crucial to the trade dependent South Korean economy, which is the fourth largest economy in Asia and accounted for 16% of total exports of chips last year.
South Korean President Yin Xiyue warned that Trump's threat to impose high tariffs on imported products from Chinese Mainland may bring risks, which may prompt competitors in Chinese Mainland to significantly reduce export prices and weaken South Korean chip companies' overseas businesses.
When the ruling party of South Korea proposed this bill, chip manufacturers such as Samsung Electronics are also preparing to face the increasingly fierce competition from competitors such as Taiwan, China and Chinese Mainland.
Samsung shares continued their decline on Tuesday, as the market worried about possible tariffs imposed by Trump and the restrictions imposed by the United States on the sale of artificial intelligence (AI) chips to Chinese Mainland.
Lee Chul gyu, one of the sponsors of the bill and South Korean legislator, said in a statement that the bill would help South Korean enterprises to meet the challenges, because during the Sino US semiconductor trade war, Chinese Mainland, Japan, Taiwan, China and the United States all provided subsidies to manufacturers.
However, Greg Noh, an analyst at Hyundai Securities, said that the bill may face a tough battle to gain approval from the liberal opposition party that controls the majority of seats in parliament.
According to the bill, some employees engaged in research and development will be allowed to extend their working hours without being restricted by labor laws, which stipulate that the weekly working hours shall not exceed 52 hours.
In November, the Samsung Electronics Union opposed this move, stating that the company was attempting to attribute "management failure" to the law.
In October of this year, Samsung apologized for its disappointing profits, falling behind competitors TSMC and SK Hynix in the booming demand for AI chips.
In October, Trump threatened to cancel federal chip subsidies for companies such as TSMC, Samsung, and SK Hynix and instead impose import tariffs.
