South Korea to unveil ambitious package for semiconductor ecosystem

South Korea is preparing an investment package for chip industry and research worth more than $7.30 billion, the finance minister said on Sunday, after declaring the country would prevail in the semiconductor ‘war.’

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Choi Sang-mok, South Korean Deputy Prime Minister and Minister of Strategy and Finance, announced that the government will soon provide specifics of the comprehensive package worth over 10 trillion won ($7.30 billion), targeted at bolstering equipment manufacturers, chip materials, fabless firms, and related research across the semiconductor supply chain.

This ambitious program aims to secure a leading role for the country in the global semiconductor industry. It will provide loans and a new financing facility, co-funded by public and private institutions.
South Korea is also building a mega chip hub south of Seoul, in Yongin (Gyeonggi province). It will become the world’s largest facility of its kind, according to officials. President Yoon Suk Yeol has vowed to use all available resources at his disposal to win the “chip war,” including government incentives such as tax breaks for investors.

Why does it matter?

This strategic move comes at a time when the Biden administration is urging allies, including South Korea, to tighten restrictions on China’s access to advanced chip technology. South Korea’s bold stance in the semiconductor sector is strengthened by the construction project of the Yongin mega chip complex, boasting investments from Samsung Electronics and SK Hynix, two of the world’s largest memory chip makers. Given that semiconductors account for a fifth of South Korea’s total exports, with $11.7 billion in March, the government’s commitment to investing massively in its semiconductor industry is significant.
South Korea’s new support package for its chip sector is an attempt to secure a leading position in the global semiconductor industry, especially in the face of escalating competition between the US and China.