South Korea provides $19 billion in support for chip manufacturing

Yoon Suk-Yol / Photo EPA-EFE/YONHAP

South Korea today announced a 26 trillion won ($19 billion) aid package for its domestic chip industry to help it face fierce competition in the global market. President Yun Suk-yeol said a financial support program worth about 17 trillion won is planned to be implemented through the state-owned development bank to support investment in the semiconductor industry, the president's office said.

"As we all know, semiconductors are an area where the war is currently being waged with full force and all means. "Winning or losing will depend on who is the first to produce the top semiconductors," Yun said at a meeting with government officials.

South Korea, the home country of the world's biggest memory chip makers Samsung and SK Hynix, lags behind some rivals in areas such as chip design and contract manufacturing.

South Korea's share of the global chip design and advertising and sales sector, which is dominated by companies such as US giant Nvidia, which designs chips and outsources production to others, is about one percent, the president's office said. There is also a gap between domestic chipmakers and leading contract manufacturers such as Taiwan's TSMC, they note.

The president said a fund worth trillions would be set up to support equipment makers and companies that design chips but supply manufacturing. Industry Minister Ahn Duk-geun emphasized that the government intends to help increase South Korea's share of the global market for non-memory chips, such as mobile processors, from the current two to 10 percent.

The aid package is larger than recently signaled by Finance Minister Choi Sang-mok, who said the government was targeting more than 10 trillion won in support for chip investment and research. The finance minister said at a press briefing that the package is at the same level as the programs of countries in the world.

Many countries, from China to the United States, are providing tens of billions of dollars in grants and other funds to help domestic chip makers. South Korea is building a mega cluster of chips in Yongin, south of the capital Seoul, to attract chip equipment makers and companies that design them but lack their own facilities.

Vowing to invest all available resources in the chip industry, President Yun said earlier this year he would extend tax incentives for investment in the domestic semiconductor industry to boost employment and attract more professionals, Reuters recalls.

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