Tax deduction for semiconductor investment to be extended

About 622 trillion won will be invested in the semiconductor cluster to be built in Yongin and the other southern parts of Gyeonggi Province over the next 20-plus years. It will be three times bigger than the current largest semiconductor cluster in the world and is expected to produce 3.5 million new jobs.

The Ministry of Trade, Industry and Energy and the Ministry of Science and ICT announced the plan to build a semiconductor mega cluster during the third discussion on people’s livelihoods on Monday, with a topic on the semiconductor industry that enriches people’s livelihoods. “The semiconductor industry is a strategic field that can succeed when human and physical resources of a nation are invested in large amounts,” said the ministries. “The modern competition is an all-out war. The efforts to maintain a super gap in the semiconductor field should be treated as a war, and an approach of a speed match should be applied.”

Sixteen new semiconductor manufacturing plants will be built in what will be the world’s largest semiconductor mega cluster to be set up by 2047 with a total investment of 622 trillion won. The cluster will be 21.02 million square meters, more than seven times larger than Yeouido in Seoul. It is also 3.4 times larger than the Hsinchu Science Park in Taiwan, which is the largest semiconductor in the world at the moment. It is expected to produce 7.7 million wafers per month as of 2030, which accounts for 25.7 percent of the world’s wafer production volume this year. The South Korean government estimated that this would create 3.46 million new jobs, both directly and indirectly.

In addition, the government will extend tax deductions for semiconductor investment, which is supposed to end by the end of this year. “The tax deduction benefit will continue by extending the effect of the law,” said South Korean President Yoon Suk Yeol. “Increased investment from tax deduction will boost the profits of all companies in the relevant ecosystem and bring more jobs and national tax revenue.” According to the Act on Restriction on Special Cases Concerning Taxation, large and medium-sized companies receive 15 percent of tax deduction benefits and small companies receive 25 percent for investment in facilities of national strategic technologies, such as semiconductors and secondary batteries. The recent decision is to extend the tax deduction benefits. “The tax authorities will consider offering the benefits permanently without suspending them,” said a member of the presidential office.


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