South Korea announced a $19 billion chip industry support package

South Korea announced a $19 billion chip industry support package
South Korea announced a $19 billion chip industry support package

A 26 trillion won ($19 billion) support package for its chip industries was launched by South Korea on Thursday, amidst “all-out warfare” in the global semiconductor market.

Amid “all-out warfare” in the global semiconductor market, South Korea announced on Thursday a 26 trillion won ($19 billion) support package for its chip industries. The country cited the necessity of being competitive in sectors like chip design and contract production.

According to the presidential office, President Yoon Suk Yeol announced under the package that a financial support program of roughly 17 trillion won was planned through the state-run Korea Development Bank to boost investments made by semiconductor companies.

“As everyone is aware, there is a full-scale national conflict going on in the semiconductor industry. Whoever can produce cutting-edge semiconductors first will determine whether they win or lose, Yoon stated at a meeting with senior government representatives.

The top two memory chip manufacturers in the world, Samsung Electronics (005930.KS) and SK Hynix (000660.KS), are based in South Korea. However, the country has lagged behind several competitors in areas like contract chip manufacturing and chip design.

According to Yoon’s office, South Korea’s percentage of the global fabless market, which is dominated by businesses like the massive American corporation Nvidia (NVDA.O.), which designs chips but outsources manufacture, was approximately 1%. It also stated that there was a difference in quality between local chipmakers and top contract chip makers, such as Taiwan’s TSMC (2330.TW), which opens a new tab.

Yoon announced the creation of a 1 trillion won fund to assist fabless and equipment manufacturers.

The government wants to increase South Korea’s share of the worldwide market for non-memory chips, such as mobile processors, from the current 2% to 10%, according to Industry Minister Ahn Duk-geun.

The deal exceeds the plans announced earlier this month by the nation’s finance minister, Choi Sang-mok, who stated that the government intended to provide support for research and investments in chips valued at over 10 trillion won.

Choi called South Korea’s chip assistance package “as good as” that of any other nation. Tens of billions of dollars have been invested by nations, from China to the US, through grants and other channels to assist their own chip industries.

According to Greg Roh, head of research at Hyundai Motor Securities, “the government is apparently trying to follow the trend where other countries are giving out subsidies for their own chip companies.”

In an effort to draw in chip equipment and fabless businesses, South Korea is developing a massive chip cluster in Yongin, south of the country’s capital Seoul, which is billed as the largest high-tech chipmaking complex in the world.

The government would reduce red tape and streamline bureaucracy, according to Finance Minister Choi, to help accelerate the chip cluster’s construction at a rate twice as fast as usual.

Yoon announced in January that he would expand tax incentives on investments in the domestic semiconductor industry in an effort to increase employment and draw in more talent. Yoon has pledged to invest all available resources in the nation’s chip industry.

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