As the semiconductor industry enters a "mega cycle" (a super-boom) beyond a "super cycle," expectations for tax revenue are rising in local governments that host production bases of major semiconductor corporations such as Samsung Electronics and SK hynix. Representative examples are Hwaseong, Yongin and Pyeongtaek in Gyeonggi Province, where the Samsung Electronics campus is located, and Icheon and Cheongju, where SK hynix production plants are situated.
According to electronic disclosures by the Financial Supervisory Service on the 4th, SK hynix's operating profit last year surged 101% from a year earlier to 47 trillion won. The operating margin reached 49%. During the same period, Samsung Electronics' operating profit came to 43.6011 trillion won, up 33.2% from 2024.
With the two corporations posting record results, the central government expects a boost in corporate tax revenue, while local governments anticipate higher local corporate income tax revenue.
The brightest smiles are in Icheon, Gyeonggi Province, where SK hynix is headquartered. According to the tax industry, Icheon is expected to collect about 350 billion won in local corporate income tax from SK hynix in April this year. That amounts to about 25% of Icheon's total annual budget of 1.3699 trillion won.
The local corporate income tax is a levy equal to 10% of the corporate tax base, paid to the local government where business sites are located. When corporations posted losses in 2023 amid a slump in the semiconductor industry, local tax revenue plummeted in 2024, putting local governments on alert over shortfalls. But as conditions rebounded in 2024 and recovered through 2025, this year is expected to see collections at an all-time high.
Other local governments are in a similar situation. Cheongju, where an SK hynix plant is located, expects 240 billion won in tax revenue. Hwaseong, Pyeongtaek, Suwon and Yongin, which had no local income tax for 2024 due to Samsung Electronics' semiconductor business posting a loss in 2023, are more hopeful than ever.
Hwaseong (200 billion), Pyeongtaek (110 billion), Suwon (105 billion) and Yongin (63 billion), where the Samsung Electronics campus is located, are expected to benefit significantly from increased tax revenue this year. Once the final filings are completed in April, the actual amount collected could exceed initial estimates.
In the case of Yongin Special City, there was no local income tax collected from Samsung Electronics in 2024, but it increased to around 23 billion won last year and is expected to top 63 billion won this year. Moreover, expectations are growing as large-scale semiconductor production lines by SK hynix and Samsung Electronics are being pushed forward in Yongin.
Beyond higher tax revenue, expectations are also high for a boost in private consumption. As semiconductor corporations signal large performance bonuses commensurate with their record results, a warm wind is blowing through the real economy in those regions, including the real estate and auto markets. If spending by high earners increases, additional local government tax revenue such as acquisition taxes also appears likely.
A former senior government economic official said, "The key to revitalizing local economies ultimately lies in attracting corporations," adding, "Tax revenue and job creation stemming from the operating profits of anchor corporations lead to local economic revitalization. The area where local government heads should focus their efforts the most is precisely attracting corporations."