Korea gives its chip industry a $19B shot in the arm

Posted on : 2024-05-24 16:54 KST Modified on : 2024-05-24 16:54 KST
70 percent of the support package will come in the form of low-interest loans
President Yoon Suk-yeol speaks at a review of economic issues held at the presidential office in Yongsan on May 23, 2024. (Yonhap)
President Yoon Suk-yeol speaks at a review of economic issues held at the presidential office in Yongsan on May 23, 2024. (Yonhap)

Korea will provide a total of 26 trillion won (US$19 billion) in additional support to its semiconductor industry as it vies for dominance amid intensifying global competition. In addition to providing financial support, including 17 trillion won in low-interest loans, the government will provide direct support for infrastructure such as electricity, water and roads needed for semiconductor manufacturing facilities.  

The announcement came from President Yoon Suk-yeol on Thursday during a meeting on economic issues at the presidential office in Yongsan.  

“Semiconductors are a field where an at all-out war is underway among states,” the president said, unveiling a 26 trillion won “comprehensive support program for the semiconductor industry, which covers the finance sector, infrastructure, R&D, and support for small and medium-sized enterprises.” 

Out of the additional 26 trillion won to be invested over the remaining three years of Yoon’s term, about 70 percent will go toward financial support for businesses. The administration said it will spend 17 trillion won on a program through the Korea Development Bank to provide preferential interest rate loans to companies investing in semiconductor equipment. It will also expand the semiconductor ecosystem fund, currently worth 300 billion won, to 1.1 trillion won. 

The administration and public institutions will also invest 2.5 trillion won to build infrastructure such as roads, water for industry, and power for the semiconductor “mega cluster” being built in Yongin, Gyeonggi Province. 

“Time counts as a subsidy, and the most important thing here is the speedy response to the issues at hand,” the president said, adding that the government and public sector will be responsible for the rapid creation of necessary infrastructure.  

The government is also pushing to amend the law to extend the investment tax credit for national strategic technologies, such as semiconductors, which is set to expire this year. In response to opposition parties criticizing such support as being nothing more than tax cuts for big business, Yoon said, “Semiconductors stand for the people’s livelihoods, and everything we do to support the semiconductor industry is for the good of the people,” while adding that over 70 percent of the program would be dedicated to SMEs. 

By Choi Ha-yan, staff reporter 

Please direct questions or comments to [english@hani.co.kr

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