South Korea has announced a substantial support package worth 26 trillion won ($19 billion) aimed at bolstering its critical semiconductor industry, according to the presidential office. President Yoon Suk Yeol detailed the government’s plan, which includes a significant financial program through the state-run Korea Development Bank, providing approximately 17 trillion won to support large-scale investments by semiconductor companies.
The package also allocates 1 trillion won to establish a fund specifically for equipment makers and fabless companies—those that design chips but outsource their manufacturing. Additionally, Yoon has directed the industry ministry to develop innovative strategies to enhance South Korea’s competitiveness in the non-memory chip sector.
This comprehensive package surpasses earlier announcements by Finance Minister Choi Sang-mok, who had indicated a support target of over 10 trillion won for chip investments and research. The semiconductor industry is vital for South Korea, accounting for 18% of the nation’s exports in April, although it has shown weaknesses in certain areas.
South Korea’s presence in the fabless sector, which includes major players like U.S. giant Nvidia, is relatively minor, with a market share of about 1%. Additionally, there is a notable gap between South Korean chipmakers and leading contract manufacturers like Taiwan’s TSMC.
To address these challenges, South Korea is constructing a mega chip cluster in Yongin, positioned south of Seoul. This high-tech complex, anticipated to be the world’s largest, aims to attract chip equipment and fabless companies, fostering innovation and industry growth.
Earlier this year, President Yoon committed to extending tax credits for investments in the domestic semiconductor industry. This move is intended to boost employment and draw more talent to South Korea’s chip sector, reflecting his administration’s resolve to secure a competitive edge in the global semiconductor market.
