By Hyunjoo Jin
SEOUL (Reuters) -South Korea’s ruling party introduced legislation on Monday to give chipmakers subsidies and an exemption from a national cap on working hours, to tackle potential risks from measures threatened by incoming U.S. President Donald Trump.
The semiconductor industry is critical for the trade-dependent economy, Asia’s fourth biggest, with chips making up 16% of total exports last year.
Last week, South Korean President Yoon Suk Yeol warned of the risks stemming from Trump’s threat of steep tariffs on Chinese imports that could prompt Chinese rivals to slash export prices and undercut Korean chip firms overseas.
The ruling party’s bill comes as chipmakers like Samsung Electronics (KS:) also brace for growing competition from rivals in countries such as Taiwan and China.
Shares of Samsung and SK Hynix extended losses on Tuesday on concerns about Trump’s potential tariffs and U.S. restrictions on AI chip sales to China.
The bill will help Korean companies fend off challenges as China, Japan, Taiwan and the United States give subsidies to manufacturers amid a semiconductor trade war between China and the U.S., one of the bill’s sponsors, lawmaker Lee Chul-gyu, said in a statement.
However, the legislation is likely to face an uphill battle to gain approval from the liberal opposition party, which controls a majority in parliament, said Greg Noh, an analyst at Hyundai Motor (OTC:) Securities.
Under the bill, some employees involved in research and development will be allowed to work longer hours, waiving a labour law that limits weekly hours worked to a maximum of 52.
This month, Samsung’s labour union opposed such a move, saying the company was trying to blame the law for its “management failure”.
Last month, Samsung apologised for its disappointing profit, having lagged rivals TSMC and SK Hynix in tapping booming demand for artificial intelligence chips.
In October, Trump threatened to scrap federal chip subsidies for Taiwan’s TSMC, South Korea’s Samsung and SK Hynix and others, in favour of import tariffs.
