Samsung’s corporate tax rate is higher than TSMC

Last month, Samsung held a delivery ceremony for 3nm foundry products using the next-generation GAA (Gate-All-Around) architecture transistor technology at the V1 production line of the Hwaseong factory in Gyeonggi-do. Samsung hopes to close the gap with TSMC by introducing new technologies and new process nodes as soon as possible. There have been reports that Samsung aims to surpass TSMC by 2030.
Samsung mass-produce 3nm process
According to Business Korea, the Korea Economic Research Institute, a subsidiary of the Federation of Korea Industries, recently released a report arguing that the competition between Samsung and TSMC will face multiple difficulties. Compared to its rivals, Samsung falls short of the business environment in terms of corporate tax rates, labor costs, and manpower supply.

The corporate tax rate of Samsung is about 25%, which is about 5% higher than that of TSMC. Although the South Korean government is promoting tax reform to reduce the tax rate to 22%, it is still higher than the other party. In terms of tax incentives and deductions, 15% of TSMC’s R&D expenses, 40% of packaging costs, and training of semiconductor engineers are eligible for tax credits, while Samsung’s R&D investment and facility construction credits are 2% and 1%, respectively.

However, South Korea will increase the proportion of tax credits through the semiconductor special act National Advanced Strategic Industries Act. The new law, which came into effect in early August this year, will increase the credits for R&D investment and facility construction to 30%-40% and 6%, respectively, to provide an advantage over their peers.

The report also shows that TSMC enjoys better conditions than Samsung in terms of labor costs and human resource supply. The average salary of TSMC employees last year was about 95 million won, while Samsung’s was about 144 million won. At the same time, the annual training scale of semiconductor engineers in Taiwan is 10,000, while that in South Korea is 1,400. In addition, regardless of electricity or water, the pricing in Taiwan is lower than in South Korea.