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

proposed a special chips act 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 bill, which needs approval from the main opposition

party to be passed, comes as chipmakers like Samsung Electronics ( SSNLF )

also brace for growing competition from rivals in

countries such as China, Taiwan and others.

It 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 United States, one of the bill's sponsors, lawmaker Lee

Chul-gyu, said in a statement.

Some employees involved in research and development will be

allowed to work longer hours under the bill, which aims to waive

the labour law limiting 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,

since it has lagged rivals TSMC and SK Hynix ( HXSCF )

in tapping booming demand for artificial

intelligence chips, as competition from Chinese companies grows.

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.