South Korea Semiconductor Plan: In a significant move to bolster its semiconductor industry, South Korea has unveiled a comprehensive support package worth approximately $23 billion. This initiative aims to strengthen the nation’s position in the global chip market amid rising competition and uncertainties surrounding U.S. trade policies.
South Korea Semiconductor Plan: Strategic Investment in the Semiconductor Sector
The South Korean government announced an increase in its support for the semiconductor industry, raising the total aid to 33 trillion won ($23.25 billion) from the previously pledged 26 trillion won. This financial boost is designed to assist domestic chipmakers, such as Samsung Electronics and SK Hynix, in navigating the challenges posed by global competition and potential U.S. tariffs.
A significant portion of this package, amounting to 20 trillion won, is allocated specifically for financial assistance programs within the chip sector. These funds are intended to support infrastructure development, provide low-interest loans, and facilitate workforce recruitment efforts. The government plans to deploy at least 4 trillion won by the end of next year to solidify its chip sector amidst international pressures.
Addressing Global Trade Challenges
The announcement comes in response to growing policy uncertainties under the current U.S. administration. President Donald Trump recently indicated that new semiconductor tariffs might be introduced, prompting South Korea to seek dialogue with Washington to mitigate potential impacts, particularly from Section 232 investigations.
South Korea’s reliance on international trade, especially in high-tech and industrial goods, makes it particularly vulnerable to external shocks. With semiconductors accounting for 21% of the country’s exports in 2024, valued at $141.9 billion, the government is keen on safeguarding this vital sector.
Enhancing Global Competitiveness
Beyond financial support, the South Korean government is implementing measures to enhance the global competitiveness of its semiconductor industry. Efforts include streamlining bureaucracy to expedite the construction of a mega chip cluster in Yongin, south of Seoul. This complex is touted as the world’s largest high-tech chipmaking facility, aiming to attract chip equipment and fabless companies.
Additionally, a 1 trillion won fund will be established to assist equipment makers and fabless companies. The government aims to boost South Korea’s global market share in non-memory chips, such as mobile processors, from the current 2% to 10%.
Legislative Support and Future Outlook
In tandem with financial initiatives, South Korea’s ruling party is pushing legislation to provide subsidies and exemptions from national caps on working hours for chipmakers. This move is intended to tackle potential risks from measures threatened by the U.S. administration and to help Korean companies fend off challenges as other countries offer subsidies to their own chip manufacturers.
President Yoon Suk Yeol has emphasized the importance of proactively responding to global market changes and opening a new future for the semiconductor industry. By investing in both memory and system semiconductors, South Korea aims to maintain its dominance in the global market and ensure the long-term growth of its semiconductor sector.
In conclusion, South Korea’s $23 billion support package represents a strategic effort to fortify its semiconductor industry against global uncertainties. Through financial assistance, infrastructure development, and legislative support, the nation is positioning itself to remain a key player in the global semiconductor landscape.
