HomeEconomySouth Korea announces mega $19B program to boost chip industry

South Korea announces mega $19B program to boost chip industry


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South Korean President Yoon Suk Yeol introduced on Thursday a file $19 billion assist plan, aiming to bolster the nation’s essential semiconductor business.

South Korea is residence to the world’s prime reminiscence chipmakers Samsung Electronics and SK hynix and final 12 months pledged to construct the world’s largest chip middle utilizing $456 billion of personal funding because it seeks an edge within the international business.

“We have created a comprehensive support program for the semiconductor industry worth 26 trillion Korean won, which encompasses financial, infrastructure, research and development, as well as support for small and medium-sized companies,” he mentioned, in keeping with a press release from his workplace.

The bundle features a $7 billion funding introduced earlier this month.

Yoon additionally mentioned Seoul would prolong tax advantages for chip investments in hopes of boosting employment and attracting extra expertise to the business.

The nation can also be constructing a “mega chip cluster” simply exterior Seoul, which the federal government claims would be the world’s largest semiconductor-making complicated and create tens of millions of jobs.

“As you all know, semiconductors are a field of national all-out war,” Yoon mentioned.

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

With the brand new bundle, Yoon mentioned there could be a “new semiconductor financial support program worth 17 trillion won” run via the Korea Development Bank to permit corporations to make essential new investments.

“As companies invest enormous amounts of money in facilities such as new factories and line expansions, liquidity problems arise,” he mentioned.

“I believe that these difficulties will be largely resolved through the Korea Development Bank’s support program,” he added.

Key sector

The plan may even create a “semiconductor ecosystem fund” value a trillion received, which can assist fabless corporations and small and medium enterprises (SMEs) linked to the business.

“Our fabless market share is still in the 1% range, and foundry, which manufactures system semiconductors, is unable to close the gap with leading companies such as TSMC,” Yoon mentioned, referring to the chip large, Taiwan Semiconductor Manufacturing Company.

Earlier this month, Seoul mentioned it could arrange an support bundle value greater than $7 billion to assist its chip business as a part of its drive to spice up the semiconductor sector, which is important to Asia’s fourth-largest financial system.

The strikes come as the federal government seems to take a position closely in six key applied sciences, together with chips, shows and batteries, all areas the place the nation’s tech giants are well-established already.

Semiconductors are South Korea’s main exports and hit $11.7 billion in March, their highest stage in virtually two years, accounting for a fifth of South Korea’s whole exports, in keeping with commerce ministry figures.

“Semiconductors are virtually the only industry South Korea can rely on as a source of growth,” Cho Dong-keun, an economics professor emeritus at Myongji University, informed Agence France-Presse (AFP).

“This announcement is seen as stemming from the necessity to carefully cultivate industries where South Korea has a clear and strategic advantage,” he mentioned.

In May 2022, Samsung unveiled an enormous 450 trillion received five-year funding blueprint to make the nation a frontrunner in key sectors, from semiconductors to biologics.

Securing provides of superior chips has turn out to be an important subject internationally, with the United States and China locked in a fierce battle for management of the market.

“South Korea is supplying 80% of the world’s memory semiconductors and has said it is investing 300 trillion won in the Yongin cluster, but there has been a water supply issue with it,” Kim Dae-jong, a professor of business administration at Sejong University in Seoul, informed AFP.

“On top of tackling such issues, today’s announcement seems to be an effort to support innovative small and medium-sized enterprises to further strengthen their competitiveness against (rivals) like Taiwan.”

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