South Korea Announces $19B Support Package For Domestic Chip Industry

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On May 23, 2024, South Korean President Yoon Suk Yeol announced a package worth 26 trillion won ($19 billion) to boost and empower its semiconductor industry. 

Last week, South Korean government declared a mega package in the Second Economic Issue Review Meeting for semiconductor businesses of the country. The country is home to leading memory chip manufacturers like Samsung electronics and SK Hynix. Now it eyes to combat its rivals in other areas like chip design and contract chip manufacturing.

President Yeol believes that in this field, all nations are advancing towards a battle. The victory will depend on who can design a cutting-edge semiconductor first. To achieve this, South Korea sets to spend generously to uplift their current 300 billion won worth chip industry. This decision follows the trend of other countries like the US and China in the global competition of semiconductor manufacturing, speculates Greg Roh, Head of Research at Hyundai Motor Securities.

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Starting this year, South Korea plans to launch an 18.1 trillion won semiconductor financial support programme. A 17 trillion won loan programme has also been sanctioned to provide investment support to local chipmakers at a subsidized interest rate. In addition to the financial aid, the package will support infrastructural development and construction of the mega chip cluster in Yongin, including transportation and other facilities for the workers. 

Furthermore, it will also extend tax credits, which will include expenses of manufacturing and investment in areas like R&D and Human Resources as the President has assured. This will not only increase employment but also attract talent to the domestic semiconductor ecosystem. Moreover, this package aims to raise the country’s market share in non-memory chips like mobile processors from 2% to 10%, said Industry Minister Ahn Duk-geun.  

Earlier this month, South Korea’s finance minister Choi Sang-mok had said that the government was targetting to launch a package of 10 trillion won to enhance research and development in the semiconductor sector of the country. After the announcement on Thursday, Choi is hopeful that the package, now bigger and better, is equivalent to any other country’s investment in the fabless sector.

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