South Korea offers $19 bn support package for chip business

South Korea President Yoon Suk Yeol has announced a 26 trillion won ($19 billion) support package for its chip businesses, citing a need to keep up in areas like chip design and contract manufacturing.
BE SemiconductorsYoon Suk Yeol said a financial support programme worth about 17 trillion won will be available through state-run Korea Development Bank to back investments by semiconductor companies.

The government also plans to extend tax breaks that are set to expire at the end of the year to facilitate large-scale investment as a semiconductor mega cluster project is currently under way in Gyeonggi Province.

Some 2.5 trillion won will be spent on building infrastructure for the envisioned cluster. The ministry will expedite due administrative procedures to halve the time needed for the construction commencement from about seven years.

A 1 trillion-won chip industry fund will be created to assist fabless and chip material companies and R&D infrastructure will be built for small and medium-sized enterprises (SMEs).

The government pledged to invest 5 trillion won in nurturing talent for R&D projects of the chip segment starting 2025 through 2027, compared with its investment of around 3 trillion won from 2022-2024.

Samsung Electronics and SK Hynix lead the world in memory chip production, but their market share in the foundry business, where companies manufacture chips designed by others, lags behind Taiwan’s TSMC, the world’s largest contract chip maker, Yonhap news agency report said.

South Korea’s share of the global fabless sector, which is dominated by companies like U.S. giant Nvidia that design chips but outsource manufacturing, stood at about 1 percent, Yoon’s office said. There was also a gap between local chipmakers and the leading contract chip makers like Taiwan’s TSMC, it said.

Yoon said a 1 trillion won fund would be set up to support equipment makers and fabless companies.

Industry minister Ahn Duk-geun said the government aimed to help boost South Korea’s global market share in non-memory chips, such as mobile processors, to 10 percent from the current 2 percent, Reuters news report said.

The package is bigger than plans flagged by the country’s finance minister Choi Sang-mok earlier this month, when he said the government was targeting support for chip investments and research worth more than 10 trillion won.

South Korea is building a mega chip cluster in Yongin, south of the capital Seoul, touted as the world’s largest high-tech chipmaking complex to attract chip equipment and fabless companies.