South Korea’s ruling party plans chips law to avert Trump threat

(Corrects to insert dropped words in headline)

By Hyunjoo Jin

SEOUL (Reuters) – South Korea’s ruling party proposed a special chips act on Monday (NASDAQ:) 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 bill, which needs approval from the main opposition party to be passed, comes as chipmakers like Samsung Electronics (KS:) also brace for growing competition from rivals in countries such as China, Taiwan and others.

It 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 United States, one of the bill’s sponsors, lawmaker Lee Chul-gyu, said in a statement.

Some employees involved in research and development will be allowed to work longer hours under the bill, which aims to waive the labour law limiting 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, since it has lagged rivals TSMC and SK Hynix in tapping booming demand for artificial intelligence chips, as competition from Chinese companies grows.

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.