South Korean President Yoon Suk Yeol on Thursday announced a record $19 billion support plan for the country’s crucial semiconductor industry. The initiative, unveiled during a government economic review meeting, will help South Korea lead its position in the global chip market, supporting memory chipmakers Samsung Electronics and SK Hynix.
The comprehensive support package, worth 26 trillion won, includes financial programs, research and development strategies, and infrastructure support. However, it stops short of providing direct subsidies, which industry players have been requesting to compete internationally.Â
President Yoon emphasized the importance of the semiconductor sector, describing it as “a field where all-out national warfare is underway” and called for South Korea to “open a new future for the semiconductor industry.”
“We have created a comprehensive support program for the semiconductor industry worth 26 trillion Korean won, which encompasses financial, infrastructure, research and development, as well as support for small and medium-sized companies,” President Yoon stated, according to his office.Â
Earlier in May the package was announce including $7 billion investment which extends tax benefits for chip investments to boost employment and attract more talent.
To address criticisms that the support package favors large conglomerates, Yoon emphasized that more than 70 percent of the program’s beneficiaries would be small and medium enterprises. The main feature of the support package is a semiconductor financial loan program worth 17 trillion won to assist chipmakers with facility investments. A 1.1 trillion chip fund will also be established to support fabless firms and parts and equipment companies.
South Korea is also developing a “mega chip cluster” near Seoul, which the government claims will be the world’s largest semiconductor-making complex and is expected to create millions of jobs. President Yoon highlighted the importance of system semiconductors and predicted their dominance in the future market. The $19 billion program will fund the construction of these mega-clusters, including essential electrical, transport, and water infrastructure to support chip manufacturing.Â
The moves come as the South Korean government plans to heavily invest in six key technologies, including chips, displays, and batteries, where the country’s tech giants are already well-established. Semiconductors, South Korea’s leading export, reached $11.7 billion in March, their highest level in nearly two years, accounting for a fifth of the nation’s total exports.Â
Samsung’s ambitious 450 trillion won investment plan, announced in May 2022, aims to position South Korea as a leader in crucial sectors from semiconductors to biologics. This investment is the global race for advanced chip supplies, with the United States and China competing fiercely for market dominance. Addressing issues like the water supply for the Yongin cluster, where South Korea is investing 300 trillion won, is a strategy to enhance the competitiveness of the country’s semiconductor industry.
In addition to financial support, the government is focusing on R&D and talent development, committing over 5 trillion won in the next three years. President Yoon emphasized the necessity for government ministers to support this vision by breaking down bureaucratic barriers and providing comprehensive support to companies. The detailed support package will be announced in June, followed by a strategy for fostering the logic chip sector in August.
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