Chip stocks gain on gov’t proposal to raise tax credit on investment

[Photo by MK DB]

South Korean chip and related stocks are gaining after the government on Tuesday proposed to revise up the tax credit on new chip facility investments to boost the industry’s competitiveness against global rivals.

Shares of Samsung Electronics Co. rose 4.3 percent to close at 57,800 won ($45.5) on Wednesday, its biggest gain since September last year. Shares of SK hynix Inc. also jumped 7.1 percent to close at 81,000 won, also biggest increase since November 2021. Shares of DB HiTek Co. closed 6.1 percent higher at 39,800 won to post biggest rise November last year.

“Chip stocks rose for two straight days on news that the government will provide more tax grants,” said Kim Seok-hwan, an analyst at Mirae Asset Securities.

The gain in chip stocks comes after the government on Tuesday proposed to revise up the tax credit on facility investments in national strategic technologies like chips, batteries, vaccines and display to up to 25 percent. Under the proposal, the tax credit for large companies will be raised to 15 percent from 8 percent with maximum 25 percent this year with an additional 10 percent tax credit if they increase investments.

[Source : SK hynix]

The stock price gain has allowed SK hynix to position itself as the third-largest market-cap stock on the main bourse with 58.9 trillion won to overtake Samsung Biologics Co.’s 56.5 trillion won.

Chip equipment and materials stocks also gained Wednesday.

Shares of Wonik IPS Co. rose 9.6 percent, Hanmi Semiconductor Co. 7.6 percent, HPSP Co. 5.5 percent and Jusung Engineering Co. 6.6 percent. Among chip materials stocks, Seoulbrain Co. jumped 6 percent, Dongjin Semichem Co. 5.9 percent and Tokai Carbon Group 6.7 percent.

Chip stocks were high in demand from foreigners. Offshore investors on Wednesday bought a net 176 billion won in Samsung Electronics shares and 59 billion won in SK hynix shares. Institutional investors were also net purchasers. They bought 83 billion won of SK hynix shares.

Individual investors, on the other hand, sold a net 173 billion won in Samsung Electronics shares and 144 billion won in SK hynix shares.