The National Assembly passed the “K-Chips Act” and the three energy-related acts during a plenary session on Feb. 27, marking a significant legislative milestone aimed at bolstering the country’s semiconductor industry and energy infrastructure. The K-Chips Act, an amendment to the Restriction of Special Taxation Act, enhances tax benefits for semiconductor companies, while the three energy-related laws focus on expanding the national power grid, managing high-level radioactive waste, and promoting offshore wind power generation. These measures are seen as crucial steps in strengthening South Korea’s industrial competitiveness and ensuring a stable power supply for its burgeoning semiconductor sector.

The Korea International Trade Association (KITA) promptly issued a statement welcoming the passage of these laws, highlighting their importance in providing relief amid external uncertainties such as the U.S. administration’s tariff policies and China’s economic strategies. “The passage of the bill to expand tax credits for semiconductor company investments, along with the three energy-related laws, is a welcome relief for our export front,” KITA stated. They further emphasized that these measures would significantly contribute to revitalizing investments and promoting corporate research and development, thereby securing a stable power supply for the semiconductor industry.

The K-Chips Act increases the tax credit rate for facility investments by semiconductor companies from 15% to 20% for large and medium-sized enterprises and from 25% to 30% for small and medium-sized enterprises. Additionally, the application period for R&D tax credits for new growth, source technologies, and national strategic technologies has been extended by five years until the end of 2029, with semiconductor R&D tax credits extended by seven years until the end of 2031. These incentives are designed to stimulate investment in a sector that is vital to South Korea’s economy, given its role as a global leader in semiconductor manufacturing.

The Korea Chamber of Commerce and Industry also expressed approval, noting that the K-Chips Act would enhance the technology and production capacity of the domestic semiconductor industry. They stressed the need for smooth consultations to support the global competitiveness of domestic companies and expedite the passage of the Semiconductor Special Act, which is expected to take more than a year due to political disagreements.

The three energy-related laws are expected to address critical energy supply challenges, enabling the operation of nuclear power plants at risk of suspension due to storage facility saturation by 2030. These laws are part of a broader strategy to support the growth of advanced industries by ensuring a stable and sufficient energy supply, which is essential for energy-intensive sectors like semiconductors.

KITA underscored the need for the National Assembly and the government to prepare reasonable measures for sustainable export growth, expressing their commitment to turning crises into opportunities and solidifying competitiveness based on policy support. “The government’s full support for the semiconductor industry, a core of advanced industries, will provide an essential foundation for export expansion and national economic growth,” KITA remarked.