South Korea Boosts Semiconductor Support to 33 Trillion Won Amid Global Competition
South Korea announced on Tuesday an expanded support package for its semiconductor industry, increasing it to 33 trillion won ($23.25 billion). This marks a rise of nearly 25% from the 26 trillion won package revealed last year.
Responding to Global Uncertainty and Rising Competition
The decision comes as South Korean firms face growing policy uncertainty under the current US administration and intensified competition from Chinese companies. A joint statement from key ministries, including the Ministry of Trade, highlighted the need for stronger government backing during this challenging period.
As part of the new measures, Seoul will expand its financial assistance programme for chipmakers to 20 trillion won, up from 17 trillion won previously. This increased funding aims to help domestic semiconductor firms cope with rising costs while maintaining their competitive edge on the global stage.
Supporting a Crucial Export Sector
Semiconductors are central to South Korea’s economy. In 2024, chip exports reached $141.9 billion, making up 21% of the country’s total exports. China and the US remained major markets, with shipments valued at $46.6 billion and $10.7 billion, respectively.
The country is home to top memory chip manufacturers such as Samsung Electronics and SK Hynix. However, South Korean firms have lagged behind in areas like chip design and contract manufacturing, areas that demand further investment.
Government of South Korea Plans to Manage US Trade Pressures
The move to increase support also comes amid potential changes in US trade policies. Former President Donald Trump recently announced he would soon reveal new tariff rates on imported semiconductors. He also suggested that some flexibility might be offered to selected firms.
South Korea’s Finance Minister Choi Sang-mok stated the government would actively consult with the US to mitigate any negative effects from ongoing Section 232 investigations into semiconductor and biopharmaceutical imports.
In a related move, South Korea recently unveiled emergency support measures for its automotive industry. These include financial aid, tax incentives, and efforts to bolster domestic demand. The government also pledged to negotiate with the US to protect its key industries and secure access to broader markets.
with inputs from Reuters