South Korea’s government reportedly outlined intentions to offer tax-based incentives to semiconductor suppliers and other technology players investing in the country, as part of a wider plan to boost the economy and build up its supply chain.

In a statement released by the country’s finance ministry, seen by Reuters, the government said it is working on plans to ensure companies making capital investment in South Korea would be handed up to a 35 per cent tax deduction.

In total, the ministry estimates the tax break could help save companies more than KRW3.6 trillion ($2.8 billion) in 2024 payments.

Breaking out the proposal, big companies could get a tax credit of 15 per cent on investments and manufacturing facilities, up from a previous plan of 8 per cent. Smaller companies would be in line to get 25 per cent, while any additional chip investments in 2023 would allow a further 10 per cent tax break.

A number of countries across the world have made efforts recently to boost domestic chip manufacturing, an effort that ramped up significantly following a widespread semiconductor shortage.

The US for example is stepping up in-house chip production, with Taiwan Semiconductor Manufacturing Co (TSMC) last month unveiling plans to boost total investment to $40 billion in the country. The UK also launched a tender for a research project, as part of a wider chip production plan and the EU is also pressing ahead with its European Chips Act, worth $43 billion in funding.

China and Japan are also pouring significant sums of cash into their chip industries.

South Korea’s plan is still subject to approval by parliament. The country is already home to major chip manufacturers Samsung and SK Hynix.