President Yoon Suk-yeol has announced a record $19 billion support plan for South Korea's crucial semiconductor industry.
South Korea is home to the world's top memory chip makers, Samsung Electronics and SK hynix, and last year pledged to build the world's largest chip center using $456 billion of private investment as it seeks an advantage in the global industry.
“We have created a comprehensive support program for the semiconductor industry worth 26 trillion Korean won. [$19.1bn]covering finance, infrastructure, research and development, as well as support for small and medium-sized businesses,” he said, according to a statement from his office.
The package includes a $7 billion investment announced earlier this month.
Yoon also said Seoul would expand tax benefits for chip investments, hoping to boost employment and attract more talent to the industry.
The country is also building a “mega chip cluster” outside Seoul, which the government says will be the world's largest semiconductor manufacturing complex and create millions of jobs.
“As everyone knows, semiconductors are a total national war field,” Yoon said.
“Winning or losing depends on who first makes next-generation semiconductors with high information processing capabilities. The State must support semiconductors so that they do not fall behind their competitors,” he added.
With the new package, Yoon said there would be a “new semiconductor financial support program worth 17 trillion won” ($12.5 billion) administered through the Korea Development Bank, to allow companies to make new investments. crucial.
“As companies invest huge amounts of money in facilities such as new factories and line extensions, liquidity problems arise,” he said.
“I believe these difficulties will be largely resolved through the support program of the Korea Development Bank,” he added.
The plan will also create a “semiconductor ecosystem fund” worth 1 trillion won ($734 million), which will support semiconductor companies and small and medium-sized businesses linked to the industry.
“Our fabless market share is still in the range of 1 percent, and the foundry, which makes system semiconductors, cannot close the gap with leading companies like TSMC,” Yoon said.
Earlier this month, Seoul said it would set out an aid package worth more than $7 billion to support its chip industry, as part of its drive to boost the semiconductor sector, which is critical to the fourth-largest economy. biggest in the world.
The moves come as the government looks to invest heavily in six key technologies, including chips, displays and batteries, all areas in which the country's tech giants are already well established.
Semiconductors are South Korea's top export, reaching $11.7 billion in March, their highest level in nearly two years, accounting for a fifth of South Korea's total exports, according to Commerce Ministry figures. .
In May 2022, Samsung unveiled a massive five-year investment plan worth 450 trillion won ($330 billion) aimed at making the country a leader in key sectors from semiconductors to biologics.
Securing the supply of advanced chips has become a crucial issue internationally, with the United States and China locked in a fierce battle for control of the market.
“South Korea supplies 80 percent of the world's memory semiconductors and has said it is investing 300 trillion won. [$220bn] in the Yongin group, but there has been a water supply problem,” Kim Dae-jong, a professor of business administration at Sejong University in Seoul, told AFP news agency.
“In addition to addressing these issues, today's announcement appears to be an effort to support innovative small and medium-sized businesses to continue strengthening their competitiveness against [rivals] like Taiwan.”
