South Korea unveils $19 billion package for chip industry
Summary
- Tax breaks set to expire at the end of the year will be extended to facilitate large-scale investment by the industry
South Korea has unveiled a $19 billion support package to bolster its semiconductor industry, seeking to catch up with international rivals amid soaring demand for advanced chips to power artificial intelligence and other computing.
The 26 trillion won ($19.03 billion) package, announced by President Yoon Suk Yeol on Thursday, focuses largely on providing financial support through state-run Korea Development Bank for chip makers and suppliers to invest in semiconductor infrastructure in the North Asian nation.
Tax breaks set to expire at the end of the year will be extended to facilitate large-scale investment by the semiconductor industry, the presidential office quoted Yoon as saying.
South Korea, home to some of Asia’s top chip makers, including Samsung Electronics and SK Hynix , saw semiconductor exports rise 56% on year in April, leading the country’s overall trade growth.
Its chip makers have been facing intense competition from companies like Taiwan Semiconductor Manufacturing Co.and Intel.
Yoon’s office added that South Korea’s market share of the global fabless industry — in which companies specialize in chip design but outsource production, and is primarily dominated by Nvidia — is around 1%, and said there is a gap between the country’s chip makers and other leading players.
SK Hynix last month said it plans to invest an additional $14.6 billion to expand its AI chip capacity in South Korea, while Samsung recently replaced the head of its semiconductor business, and called the leadership change a “pre-emptive measure" aimed at strengthening the company’s competitiveness.
The chip aid package comes as the U.S. moves to boost its chip sector and attract manufacturing amid the race for AI development.
Last month, the U.S. granted up to $6.4 billion to Samsung to build a chip-making facility in Texas, and up to $6.6 billion to help TSMC as the world’s largest contract chip maker invests $65 billion in chip factories in Arizona, making the companies two of the biggest recipients of subsidies under the U.S. Chips Act. Intel and GlobalFoundries earlier this year received grants under the act as well.
Write to Kimberley Kao at kimberley.kao@wsj.com
