SEOUL Nov 11 (Reuters) - South Korea's ruling party

introduced legislation on Monday to give chipmakers subsidies

and an exemption from a national cap on working hours, to tackle

potential risks from measures threatened by incoming U.S.

President Donald Trump.

The semiconductor industry is critical for the

trade-dependent economy, Asia's fourth biggest, with chips

making up 16% of total exports last year.

Last week, South Korean President Yoon Suk Yeol warned of

the risks stemming from Trump's threat of steep tariffs on

Chinese imports that could prompt Chinese rivals to slash export

prices and undercut Korean chip firms overseas.

The ruling party's bill comes as chipmakers like Samsung

Electronics ( SSNLF ) also brace for growing competition from

rivals in countries such as Taiwan and China.

Shares of Samsung and SK Hynix ( HXSCF ) extended losses

on Tuesday on concerns about Trump's potential tariffs and U.S.

restrictions on AI chip sales to China.

The bill will help Korean companies fend off challenges as

China, Japan, Taiwan and the United States give subsidies to

manufacturers amid a semiconductor trade war between China and

the U.S., one of the bill's sponsors, lawmaker Lee Chul-gyu,

said in a statement.

However, the legislation is likely to face an uphill battle

to gain approval from the liberal opposition party, which

controls a majority in parliament, said Greg Noh, an analyst at

Hyundai Motor Securities.

Under the bill, some employees involved in research and

development will be allowed to work longer hours, waiving a

labour law that limits weekly hours worked to a maximum of 52.

This month, Samsung's labour union opposed such a move,

saying the company was trying to blame the law for its

"management failure".

Last month, Samsung apologised for its disappointing profit,

having lagged rivals TSMC and SK Hynix ( HXSCF ) in

tapping booming demand for artificial intelligence chips.

In October, Trump threatened to scrap federal chip subsidies

for Taiwan's TSMC, South Korea's Samsung and SK Hynix ( HXSCF ) and

others, in favour of import tariffs.