South Korea Unveils $19 Billion Support Package for Semiconductors

South Korea announced a substantial support package worth 26 trillion won ($19 billion) to bolster its semiconductor industry, emphasizing the need to remain competitive in the global market.

The initiative, described by President Yoon Suk Yeol as essential to surviving the "all-out warfare" in the semiconductor sector, aims to enhance capabilities in chip design and contract manufacturing.

President Yoon outlined that the package includes a 17 trillion won financial support program managed by the state-run Korea Development Bank.

This funding is intended to support investments by semiconductor companies, providing them with the necessary resources to innovate and produce advanced chips.

"Semiconductors are a field where all-out national warfare is underway. Win or lose, that depends on who can make cutting-edge semiconductors first," Yoon stated during a meeting with senior government officials.

Despite being home to leading memory chip manufacturers like Samsung Electronics and SK Hynix, South Korea has lagged in areas such as chip design and contract chip manufacturing.

The global fabless sector, dominated by companies like U.S.-based Nvidia, sees South Korea holding a mere 1% share. Additionally, there is a noticeable gap between South Korean chipmakers and top contract manufacturers such as Taiwan's TSMC.

To address these disparities, a 1 trillion won fund will be established to support equipment makers and fabless companies.

This is part of a broader effort to increase South Korea's market share in non-memory chips, such as mobile processors, from the current 2% to 10%, according to Industry Minister Ahn Duk-geun.

This newly announced package exceeds previous plans mentioned by Finance Minister Choi Sang-mok, who had indicated that the government was targeting more than 10 trillion won in support for chip investments and research.

In a press briefing, Choi described South Korea's chip support package as "as good as" any other country's efforts.

Countries globally, including China and the United States, are investing tens of billions of dollars through grants and other subsidies to bolster their own semiconductor industries.

"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.

The South Korean government's aggressive push to enhance its semiconductor sector is part of a strategic move to ensure that its industry remains competitive and can contribute significantly to the global market amidst intensifying international competition.