South Korea has passed legislation to provide tax breaks for its semiconductor companies in a bill known as the "Korean Chip Act.". At the same time, the country's trade minister has once again complained that the standards for South Korean companies to obtain US funds are unacceptable, which may indicate the growing protectionism in the global chip market. In order to improve the level of tax relief, the Korean Congress passed an amendment to the Special Tax Restriction Act. The exemption will be granted to companies investing in semiconductor production and other strategic industries in the country. These tax credits seem to be in line with earlier reports on the Korean government's plans. Big companies such as Samsung Electronics and SK Hynix will provide up to 15% tax credits for investments in strategic technologies such as semiconductor manufacturing, up from the previous 8%. According to the Korean Herald, raising the deduction rate from 8% to 15% will save about 2.5 trillion won ($1.9 billion) in taxes for the local chip industry. For small and medium-sized enterprises, the tax credit rate will be increased from 16% to 25%, a move aimed at promoting domestic investment in key technology areas. The move follows the announcement by the South Korean government earlier this month of plans to inject cash into several key industries, including semiconductors and electric vehicles. As part of these plans, Samsung stated that its goal is to invest $230 billion in the next 20 years to build five semiconductor factories in the region. South Korea is not the only country or region that provides such tax relief. In January, Taiwan, China, the home of the semiconductor giant TSMC, passed similar legislation, allowing its chip manufacturers in the island to use up to 25% of their annual R&D expenses for tax credits, so as to ensure Taiwan's continued leadership in chip manufacturing. The United States also passed the CHIPS Act last year, authorizing $52 billion in funding to revitalize its semiconductor manufacturing industry, while the European Union is advancing the European Chip Act at its own pace to release 43 billion euros ($46 billion) for capacity-building and innovation to reduce Europe's dependence on chip supplies elsewhere. The danger is that all of this could evolve into a subsidy competition between countries and regions. This danger is considered real enough to become one of the topics discussed at the EU-U.S. Trade and Technology Commission (TTC) meeting, which was established to coordinate global trade, economic, and technological issues between the two. You can no longer rely on global electronic supply chains This may also be a sign of the rise of protectionism in the global chip industry. Although the funding of the CHIPS bill in the United States is theoretically open to companies from other countries, SK Hynix of South Korea complained that the process is too cumbersome, and its trade minister warned that it has additional conditions and requires detailed disclosure of key technical and financial information. According to Reuters, Taiwan's TSMC has expressed similar concerns, with a spokesman saying, "Some conditions are unacceptable.". Richard Gordon, Vice President of Semiconductor and Electronics at Gartner, told us that he believes that the new chip subsidies should not be seen as traditional protectionism. "What is more important is to create an attractive investment environment to compete globally and strive to achieve more national self-sufficiency in key technology supply chains," he told us. "However, yes, we are entering a new environment where governments realize that they must focus on policy making in these areas, rather than relying on global electronic supply chains to provide solutions," Gordon added. Andrew Buss, senior research director for Europe at IDC, agreed, saying, "I think this may be a bit protectionist, but it is more about encouraging large-scale capital investment to build cutting-edge wafer factories in the region to achieve more self sufficiency in the country's semiconductor and technology industries." Earlier this month, retired TSMC founder Zhang Zhongmou warned that the globalization of the chip industry was actually over as US efforts to contain China led to the fragmentation of the global supply chain. "In my opinion, there is no doubt that globalization has died in the chip industry. Free trade is not that dead, but it is in danger," Chang said.