South Korea's National Assembly Passes Long-Stalled Chip Act

According to foreign media reports, after an 18-month political deadlock, the South Korean National Assembly passed a long-stalled special bill on January 29. The bill aims to support the development of South Korea's semiconductor industry, which is both a mainstay of the country's export economy and a core strategic pillar for its participation in the global artificial intelligence race.

Image source: Samsung Electronics

The official title of this bill is the "Special Act on Strengthening and Supporting the Competitiveness of the Semiconductor Industry." It establishes a comprehensive institutional framework to support the entire semiconductor industry chain, covering memory chips, system chips, as well as chip design, manufacturing, and packaging, while also encompassing critical materials, components, and production equipment.

The bill originally included a clause exempting semiconductor companies from South Korea's 52-hour workweek cap, which was one of the most controversial aspects of the bill. This clause was formally removed following strong opposition from labor groups. The bill added a supplementary opinion recognizing the semiconductor industry's higher need for work hour flexibility and indicating that the issue would be further discussed at the special committee level.

Previously, the South Korean government's support funds for the semiconductor industry were scattered across various budget items and departmental special programs. The new bill, through institutional design, has achieved more centralized and sustained support for the industry.

South Korea will establish a Presidential Committee on Strengthening Semiconductor Competitiveness to comprehensively formulate national chip industry policies. It will also develop an overall industry plan to guide subsequent industrial support actions. The bill also requires the establishment of a special accounting unit to secure funding for related support efforts.

The bill also lays the legal groundwork for balanced regional development. The South Korean government can designate semiconductor industry clusters outside the Seoul Metropolitan Area, provide support for the construction and operation of infrastructure for these clusters, and offer policy incentives to companies and research institutions relocating to them.

The bill also provides a legal basis for diverse industry support measures. These measures include establishing national-level R&D projects, building pilot testing and verification centers, constructing an ecosystem of materials, wafer foundries, and system-on-a-chip industries, implementing talent development programs, attracting overseas high-end talent, and exempting certain regulatory processes such as licensing approvals and preliminary feasibility studies for projects.

South Korean Industry Minister Kim Jung-kwan stated, "Semiconductors are not only South Korea's largest export item, but also a strategic asset that determines South Korea's national and economic security in the era of artificial intelligence."

Kim Jung-kwan added, "After the bill is officially enacted, we will promptly formulate supporting implementation regulations to ensure that the support policies are truly implemented and effective. The competition in the global AI chip field is intensifying, and our goal is to consolidate and expand South Korea's technological leadership in this area."

This bill was one of President Lee Jae-myung's core campaign promises. After passing the National Assembly, it will be submitted to the cabinet for promulgation. Once the supplementary enforcement decrees are finalized, the bill is expected to take effect as early as the third quarter of this year.