South Korea unveils $19 billion boost for chip industry

South Korea has unveiled a substantial 26 trillion won ($19 billion) support package for its semiconductor industry to stay competitive in the fiercely contested global market. Announced by President Yoon Suk Yeol, the package includes a 17 trillion won financial support program from the state-run Korea Development Bank to boost investments by semiconductor companies. Yoon emphasised the urgency of advancing in chip design and contract manufacturing, highlighting the ongoing ‘all-out warfare’ in the global semiconductor sector.

Despite being home to leading memory chip makers like Samsung Electronics and SK Hynix, South Korea lags in chip design and contract manufacturing. The nation holds only about 1% of the global fabless market, dominated by companies such as Nvidia, and faces a significant gap with top contract chip manufacturers like Taiwan’s TSMC. To address this issue, the government plans to establish a 1 trillion won fund to support equipment makers and fabless companies and aims to increase its share in non-memory chips from 2% to 10%.

Finance Minister Choi Sang-mok stated that the chip support package positions South Korea competitively on the global stage, comparable to substantial investments made by countries like the US and China. The government also plans to cut red tape to expedite the construction of a mega chip cluster in Yongin, which is projected to be the world’s largest high-tech chipmaking complex. Additionally, President Yoon has pledged to extend tax credits for investments in the semiconductor sector to boost employment and attract talent.