Signal Korea launches IRA-style production tax credit covering chips, batteries and AI robots

Summary

South Korea's government designated six strategic product categories, including semiconductors, batteries, and AI robots, as the first targets of a new production-linked tax credit modeled on the US Inflation Reduction Act. The move is framed as a significant shift in industrial policy aimed at protecting and strengthening domestic supply chains, coming amid competing onshoring and subsidy pushes from the US, Japan, and other major economies. A key feature of the scheme is that it extends direct-pay subsidies to loss-making companies that would otherwise be unable to benefit from a standard tax credit, covering firms with no current tax liability. By tying the credit directly to production volume, the design mirrors elements found in the IRA's incentive structures for clean energy and semiconductor manufacturing. This selection marks the first step in specifying which items qualify, with the government intending to use the credit as a policy tool to safeguard strategic industry supply chains.