South Korea announced on Tuesday an increase in its support package for the semiconductor industry to 33 trillion won (approximately $23.25 billion), a 25% rise from last year’s 26 trillion won package. The new measures aim to provide a buffer against mounting challenges, particularly the uncertainty surrounding U.S. tariffs on imported semiconductors.
The increased investment is also designed to maintain the country’s competitiveness in the global semiconductor market, which is currently under pressure from U.S. trade policies and rising competition from Chinese chipmakers.
The South Korean government also revealed plans to invest an additional $4.9 billion into the semiconductor sector, citing the ongoing uncertainty surrounding U.S. trade policies. The increase in funding is seen as a strategic move to protect the nation’s vital chip industry, which faces potential setbacks due to U.S. tariff threats. As a major exporter to the U.S., South Korea’s semiconductor and automotive industries could be heavily impacted by the proposed 25% levies under the current administration.
As part of the package, the South Korean government will allocate an additional 4 trillion won in fiscal spending through 2026, focusing on infrastructure development, including underground transmission lines at under-construction semiconductor clusters.
Finance Minister Choi Sang-mok emphasized that the package would also include measures to secure talent for the industry and support semiconductor company investment.
South Korea’s semiconductor sector remains vital to its economy, with key players like Samsung Electronics and SK Hynix driving its dominance in the memory chip market. However, these companies face increasing pressure due to U.S. tariff threats and intensifying competition.
In response, the government has ramped up its support through direct investments and fiscal measures to shield local firms from external economic shocks. The semiconductor sector accounted for over 21% of South Korea’s total exports in 2024, with key markets including China and the U.S.
The uncertainty surrounding U.S. trade policies, particularly the potential for a 25% tariff on South Korean semiconductor products, has triggered concerns within the industry. The looming threat remains despite U.S. President Donald Trump’s temporary suspension of the tariff hikes, which were initially announced in April. Finance Minister Choi noted that this “grace period” offers a critical window for South Korean companies to strengthen their positions in the global semiconductor race.
In addition to this financial support, the South Korean government plans to actively engage with the U.S. to minimize the potential adverse impact of tariffs on domestic companies. The government’s efforts include lobbying to prevent tariffs on key sectors such as semiconductors and biopharmaceuticals. This ongoing dialogue aims to ensure that South Korean companies, including its memory chip giants, continue to thrive amid global trade tensions.
Last week, U.S. President Donald Trump engaged in discussions with South Korean Prime Minister Han Duck-soo, who is temporarily fulfilling the presidential duties after President Yoon Suk Yeol was removed from office for alleged attempts to undermine civilian governance.
In addition, U.S. Treasury Secretary Scott Bessent announced that trade talks between the U.S. and South Korea will take place next week, signaling ongoing negotiations over tariffs and trade policies. These discussions are crucial for South Korea, which has faced significant pressure from U.S. tariffs, particularly in key sectors like semiconductors and automobiles.
In response to these challenges, South Korea has also unveiled emergency measures to support its automotive sector, which has seen a steady rise in exports to the U.S. The government has introduced financial assistance, tax cuts, and subsidies to stimulate domestic demand and mitigate the impact of U.S. tariffs. These measures are part of a broader 12 trillion won ($8.4 billion) supplementary budget proposal, which is currently awaiting approval from the National Assembly.
