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South Korea Prepares $7 Billion Support Package for Semiconductor Industry

Published: 6.3.2024

South Korea has announced a comprehensive support package valued at over $7 billion to strengthen the country's semiconductor supply chain and enhance its global competitiveness amid increasing geopolitical tensions. 

Finance Minister Choi Sang-mok revealed that the support package will focus on various critical segments of the semiconductor industry, including chip materials, equipment manufacturers, and fabless companies. 

The government is considering multiple financing options, such as utilizing the state-owned Korea Development Bank or establishing a joint public-private fund to provide robust financial backing for the initiative, including advanced packaging and mini fab projects, which will undergo feasibility studies in the near future. 

South Korea faces pressure from the United States to curb semiconductor technology exports to China. The U.S. has been urging its allies to restrict China's access to high-end chip manufacturing equipment and technologies. In response, South Korea has negotiated waivers to allow companies like Samsung and SK Hynix to continue their expansion plans in China despite these geopolitical tensions. 

President Yoon Suk Yeol has pledged full support for the semiconductor industry, emphasizing the allocation of all available resources to secure victory in the global "chip war." The government plans to offer investment tax credits and expand research and development tax benefits to stimulate growth and innovation within the sector. Additionally, South Korea is constructing a mega chip cluster in Yongin, south of Seoul, which is expected to become the world's largest high-tech complex of its kind. 

South Korea's strategic investment in its semiconductor industry aligns with its broader goal to maintain and enhance its dominance in the global market. The nation, home to two of the world's largest memory chip manufacturers, Samsung Electronics and SK Hynix, aims to solidify its leadership by investing heavily in infrastructure and innovation. The government's commitment to providing substantial incentives for production and research underscores its determination to navigate the complexities of the global semiconductor supply chain and secure a competitive edge. 

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