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South Korea unveils $19 billion support package for semiconductor sector to compete in global chip ‘war’

Posted on by darion

South Korea announced a 26 trillion won ($19 billion) support package for its chip businesses on Thursday, citing the need to keep pace in areas such as design and contract manufacturing amid a global “total war” semiconductor market.
According to the package, the president of South Korea Yoon Suk-yeol said the state-owned Korea Development Bank is planning a financial support program worth about 17 trillion won to support investment by semiconductor companies, according to the president’s office.

“As we all know, semiconductors are an area where there is a nationwide war going on,” Yoon said at a meeting with top government officials. “Win or lose, it depends on who produces cutting-edge semiconductors first.”

South Korea, home of the world’s largest memory chip manufacturers Samsung electronics AND SK Hynixit has lagged behind some rivals in areas such as semiconductor design and contract manufacturing.
South Korean President Yoon Suk-yeol attends a press conference marking two years in office at the President’s Office in Seoul, May 9, 2024. Photo: EPA-EFE
South Korea’s share in the global fabless sector – dominated by companies such as the American giant Nvidia, which designs chips but outsources manufacturing, was about 1 percent, Yoon’s office said. There was also a gap between local semiconductor manufacturers and leading contract chip makers such as A Taiwanese semiconductor companyit said.

Yoon said a 1 trillion won fund will be established to support chip equipment makers and companies without factories.

Minister of Trade, Industry and Energy Ahn Duk-geun said the government intends to help increase South Korea’s share of the global market for non-memory chips, such as mobile processors, to 10 percent from the current 2 percent.

The new financing package is larger than plans unveiled by Minister of Economy and Finance Choi Sang-mok earlier this month, when he said the government plans to support chip investment and research worth more than 10 trillion won.

South Korean Minister of Trade, Industry and Energy Ahn Duk-geun inspects a semiconductor production line during a visit to the SK Hynix plant in Icheon, 56 km southeast of Seoul, January 11, 2024. Photo: EPA-EFE

At the news conference, Choi described South Korea’s chip support package as “as good as” that offered in any other country.

Countries around the world, starting from China down United States are committing tens of billions of dollars through grants and other means to support their own semiconductor sectors.

“The government is clearly trying to follow the trend of other countries giving subsidies to their own chipmakers,” said Greg Roh, head of research at Hyundai Motor Securities.

South Korea is building a megachip cluster in Yongin, south of the capital Seoultouted as the world’s largest high-tech chip manufacturing complex, intended to attract semiconductor equipment makers and companies without factories.

Finance Minister Choi said the government would simplify and cut red tape to accelerate chip cluster construction at twice the normal pace.

In January, Yoon, who promised to devote all possible resources to the domestic chip industry, said he would expand tax breaks for investments in the domestic semiconductor industry to boost employment and attract more talent.