South Korea has announced a ₩26-trillion (US$19-billion) support package for its chip businesses, citing a need to keep up in areas like chip design and contract manufacturing amid “all-out warfare” in the global semiconductor market.
Under the package, President Yoon Suk Yeol said a financial support programme worth about ₩17-trillion was planned through state-run Korea Development Bank to back investments by semiconductor companies, according to the presidential office.
“As we all know, semiconductors are a field where all-out national warfare is under way. Win or lose depends on who can make cutting-edge semiconductors first,” Yoon said at a meeting with top government officials.
South Korea, home to the world’s top memory chip makers, Samsung Electronics and SK Hynix, has fallen behind some rivals in areas such as chip design and contract chip manufacturing.
South Korea’s share of the global fabless sector, which is dominated by companies like US giant Nvidia that design chips but outsource manufacturing, stood at about 1%, Yoon’s office said. There was also a gap between local chip makers and the leading contract chip makers like Taiwan’s TSMC, it said.
Yoon said a ₩1-trillion fund would be set up to support equipment makers and fabless companies.
Industry minister Ahn Duk-geun said the government aimed to help boost South Korea’s global market share in non-memory chips, such as mobile processors, to 10% from the current 2%.
The package is bigger than plans flagged by the country’s finance minister, Choi Sang-mok, earlier this month, when he said the government was targeting support for chip investments and research worth more than ₩10-trillion.
Subsidies
In a press briefing, Choi described South Korea’s chip support package “as good as” any other country.
Countries around the world ranging from China to the US have been ploughing tens of billions of dollars via grants and other means to support their own chip sectors.
“The government is apparently trying to follow the trend where other countries are giving out subsidies for their own chip companies,” said Greg Roh, head of research at Hyundai Motor Securities.
South Korea is building a mega chip cluster in Yongin, south of the capital Seoul, touted as the world’s largest high-tech chip-making complex to attract chip equipment and fabless companies.
Finance minister Choi said the government would streamline bureaucracy and cut red tape to help speed up construction of the chip cluster at twice the normal rate.
In January, Yoon, who has vowed to pour all possible resources into the country’s chip industry, said he would extend tax credits on investments in the domestic semiconductor industry to boost employment and attract more talent. — Jack Kim and Heekyong Yang, with Hyonhee Shin and Ju-min Park, (c) 2024 Reuters
