South Korea, housing leading memory chip manufacturers like Samsung Electronics and SK hynix, committed last year to constructing the world's largest chip center through $456 billion in private investment, aiming to gain a competitive advantage in the global industry. "We have created a comprehensive support programme 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 said, according to a statement from his office.
The package encompasses a $7 billion investment recently announced earlier this month. Yoon additionally mentioned that Seoul plans to extend tax incentives for chip investments, aiming to stimulate job growth and attract further talent to the industry. Furthermore, the country is in the process of establishing a "mega chip cluster" located just outside Seoul, touted by the government as the largest semiconductor manufacturing complex globally, with the potential to generate millions of job opportunities.
With the new package, Yoon said a 'new semiconductor financial support programme worth 17 trillion won' would be run through the Korea Development Bank to allow companies to make crucial new investments. "As companies invest enormous amounts of money in facilities such as new factories and line expansions, liquidity problems arise", he said. The plan will also establish a 'semiconductor ecosystem fund' worth one trillion won to support fabless companies and small and medium enterprises associated with the industry. "Our fabless market share is still in the one percent range, and foundry, which manufactures system semiconductors, is unable to close the gap with leading companies such as TSMC", Yoon said.
Earlier this month, Seoul announced plans to implement an aid package exceeding $7 billion aimed at bolstering its chip industry. This initiative is integral to the efforts to enhance the semiconductor sector, crucial to Asia's fourth-largest economy. These measures coincide with the government's substantial investment focus on six pivotal technologies, encompassing chips, displays, and batteries, all domains where the nation's tech giants have already established strong footholds.
According to data from the trade ministry, semiconductors have emerged as South Korea's primary export, reaching $11.7 billion in March, marking their highest level in nearly two years. They constitute one-fifth of the nation's total exports. In May 2022, Samsung unveiled an extensive five-year investment plan totaling 450 trillion won, aimed at positioning the country as a leader in vital sectors ranging from semiconductors to biologics. The global pursuit to secure supplies of advanced chips has escalated into a critical issue, as evidenced by the intense competition between the United States and China for dominance in the market.
"South Korea is supplying 80 percent 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, told 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".