South Korean president announces record $19 billion plan to boost chip industry

“We have created a comprehensive support package for the semiconductor industry worth 26 trillion Korean won, which encompasses finance, infrastructure, research and development, as well as support for small and medium-sized businesses,” he declared, according to a press release from his government. desk.

The package includes a $7 billion investment announced earlier this month.

Yoon also said Seoul would extend tax benefits to microchip investments, hoping to boost employment and attract more talent to the industry.

The country is also building a “mega-chip cluster” just outside Seoul, which the government says will be the world’s largest semiconductor manufacturing complex and create millions of jobs.

“As you all know, semiconductors are an area of ​​total national war,” Yoon said.

“Winning or losing depends on who first manufactures cutting-edge semiconductors with high information processing capabilities. The state must provide support for semiconductors so that they do not lag behind their competitors,” he added.

With the new plan, Yoon said there will be a “new semiconductor financial support program worth 17 trillion won” managed by the Korea Development Bank, to enable companies to achieve crucial new investments.

“As companies invest huge amounts of money in facilities such as new factories and line extensions, liquidity problems arise,” he said.

“I believe these difficulties will be largely resolved thanks to the Korean Development Bank’s support program,” he added.

The plan will also create a “semiconductor ecosystem fund” worth 1 trillion won, which will support fabless and industry-related small and medium-sized businesses.

“Our fabless market share is still around 1%, and the foundry, which makes system semiconductors, is unable to close the gap with leading companies such as TSMC,” Yoon said.

Earlier this month, Seoul announced it would roll out an aid package worth more than $7 billion to support its chip industry, as part of its efforts to boost the semiconductor sector, essential to Asia’s fourth largest economy.

The moves come as the government seeks to invest heavily in six key technologies, including chips, displays and batteries, all areas in which the country’s tech giants are already well established.

Semiconductors are South Korea’s top export and reached $11.7 billion in March, their highest level in nearly two years, accounting for a fifth of South Korea’s total exports, according to data. figures from the Ministry of Commerce.

Samsung unveiled a massive 450 trillion won, five-year investment plan in May 2022 aimed at making the country a leader in key sectors ranging from semiconductors to biologics.

Securing the supply of advanced chips has become a crucial issue internationally, as the United States and China wage a fierce battle for control of the market.

“South Korea supplies 80% of the world’s memory semiconductors and said it would invest 300 trillion won in the Yongin cluster, but there has been a water supply problem,” said Kim Dae-jong, professor of business administration at Sejong University in Seoul, told AFP.

“In addition to addressing these issues, today’s announcement appears to be an effort to support innovative small and medium-sized businesses to further strengthen their competitiveness against (rivals) like Taiwan.”