Key Points
- South Korea announces a 26 trillion won support package for its semiconductor industry to enhance chip design and manufacturing capabilities.
- The package includes 17 trillion won in financial support. A 1 trillion won fund will support equipment makers and fabless companies.
- The government aims to increase South Korea’s global market share in non-memory chips from 2% to 10%.
- The construction of a mega-chip cluster in Yongin is being developed to attract chip equipment and fabless companies.
South Korea has announced a substantial support package worth 26 trillion won ($19 billion) to bolster its semiconductor industry. The initiative aims to enhance the country’s chip design and contract manufacturing capabilities amidst intense global competition. President Yoon Suk Yeol highlighted the urgency of this investment, referring to the semiconductor industry as a battleground of “all-out national warfare.”
The package includes a financial support program of approximately 17 trillion won through the state-run Korea Development Bank, aimed at encouraging investments by semiconductor companies. “Win or lose in the semiconductor race depends on who can produce cutting-edge chips first,” Yoon stated during a meeting with top government officials.
South Korea is home to leading memory chip makers like Samsung Electronics and SK Hynix. However, it lags in the fabless sector and contract chip manufacturing, areas dominated by global players such as Nvidia and Taiwan’s TSMC. South Korea’s share of the global fabless market is a mere 1%, underscoring the need for substantial improvement. To address this, the government will establish a 1 trillion won fund to support equipment makers and fabless companies. Industry Minister Ahn Duk-Geun outlined a goal to increase South Korea’s global market share in non-memory chips, such as mobile processors, from 2% to 10%.
This package surpasses previous plans announced by Finance Minister Choi Sang-mok, who mentioned a target of over 10 trillion won for chip investments and research. Choi emphasized that South Korea’s chip support package is “as good as” other nations. Countries worldwide, including China and the United States, invest heavily in their semiconductor sectors through grants and subsidies. Greg Roh, head of research at Hyundai Motor Securities, noted, “The government is following the trend where other countries are giving out subsidies for their own chip companies.”
One of the key projects is the construction of a mega chip cluster in Yongin, south of Seoul. The cluster aims to attract chip equipment and fabless companies. Finance Minister Choi announced measures to streamline bureaucracy and cut red tape to expedite the project’s completion, aiming to double the normal construction speed.
In addition to financial support, President Yoon has pledged to extend tax credits on investments in the domestic semiconductor industry to boost employment and attract talent. This comprehensive strategy underscores South Korea’s commitment to securing a leading position in the global semiconductor market.
