Government to Increase Tax Support for Semiconductor Investment... National Funding for Yongin and Pyeongtaek

Ministry of Industry Announces 'Semiconductor Superpower Achievement Strategy'
Corporate Tax Credit Rate Raised from 6% to 8%
Test Equipment Newly Designated as National Strategic Technology
Government Funding for Infrastructure at Samsung Pyeongtaek Campus
340 Trillion Won Investment Expected in Semiconductor Industry Over Next 5 Years

President Yoon Seok-yeol Examining a Photomask
(Seoul=Yonhap News) President Yoon Seok-yeol is looking at a semiconductor photomask received from Minister Lee Jong-ho of the Ministry of Science and ICT during a Cabinet meeting held at the Yongsan Presidential Office building in Seoul on June 7, 2022. 2022.6.7 [Provided by the Presidential Office. Resale and DB prohibited]
Photo by Jeong@yna.co.kr
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＜Copyright(c) Yonhap News Agency, Unauthorized reproduction and redistribution prohibited＞

[Asia Economy Sejong=Reporter Lee Junhyung] The Yoon Suk-yeol administration has unveiled a comprehensive plan to support companies with the goal of becoming a ‘semiconductor superpower.’ The core of the plan is to further strengthen tax benefits for semiconductor facility investments and support infrastructure construction with national funds. Thanks to government policies, investments worth approximately 340 trillion won are expected to be made in the semiconductor industry alone over the next five years.

On the 21st, Minister Lee Chang-yang of the Ministry of Trade, Industry and Energy announced the ‘Semiconductor Superpower Achievement Strategy’ at Dongjin Semichem’s Balan plant located in Hwaseong, Gyeonggi Province. The strategy announced on this day was prepared over about two months since the launch of the Yoon Suk-yeol administration last May, through consultations with related ministries such as the Ministry of Economy and Finance and the Ministry of Science and ICT. Minister Lee said, "Just as the industrial field continues to evolve, this policy is not the final version of the semiconductor strategy," adding, "We will closely communicate with the industry, supplement related measures, and implement the semiconductor strategy."

The core of this semiconductor strategy is ‘promoting corporate investment.’ The government plans to first revise the Restriction of Special Taxation Act to expand tax credits for facility investments in national strategic technologies such as semiconductors. If the Restriction of Special Taxation Act is revised as planned, the tax credit rate for semiconductor facility investments by large corporations will increase by 2 percentage points from the current 6% to 8%. This effectively makes it the same as the tax credit rate for medium-sized enterprises (8%).

The scope of national strategic technologies eligible for tax credits will also be expanded. According to the current Restriction of Special Taxation Act, the support targets receiving tax benefits as national strategic technologies are limited to advanced semiconductor process equipment. Accordingly, the government plans to newly designate several fields within the semiconductor industry, such as test equipment and intellectual property (IP) design and verification technologies, as national strategic technologies.

The government will also support infrastructure construction for large-scale semiconductor industrial complexes. The support targets are the Yongin Semiconductor Cluster and Pyeongtaek Campus, where SK Hynix and Samsung Electronics are investing 130 trillion won and 120 trillion won respectively for new and expansion projects. The government plans to support part of the essential infrastructure construction costs such as power and water supply for the Yongin Semiconductor Cluster and Pyeongtaek Campus with national funds.

The specific scale of government infrastructure support is expected to be revealed as early as the end of next month. Based on these support policies, the government expects the semiconductor industry to invest about 340 trillion won from this year through 2026. An official from the Ministry of Trade, Industry and Energy stated, "Local governments currently support about 50% of essential infrastructure construction costs when creating industrial complexes," adding, "We are consulting with budget authorities while referring to the local government support ratio."

This content was produced with the assistance of AI translation services.