Korean Government Announces $10 Billion Support Package for Semiconductor Industry

The Korean government today announced a comprehensive 14 trillion won ($10 billion USD) policy financing package to bolster its semiconductor industry amid growing global uncertainties. This initiative aims to support chip material, component, and equipment manufacturers, as well as fabless companies, facing increased trade risks.

The announcement comes in response to concerns surrounding potential changes in US government support for Korean semiconductor companies under the incoming administration, and escalating competition with China. While Samsung Electronics and SK hynix currently benefit from the US CHIPS and Science Act, receiving significant subsidies for their US-based facilities, the Korean government is proactively mitigating potential future challenges.

The 14 trillion won package will be deployed across various initiatives in 2025, including:

• Direct Policy Financing: A substantial portion of the funding will be allocated as direct financial support to companies across the semiconductor value chain.
• Infrastructure Investment: The government will contribute 1.8 trillion won towards the 3 trillion won cost of undergrounding transmission lines for a new semiconductor cluster in Yongin, Gyeonggi Province, significantly reducing the burden on participating companies.
• Low-Interest Loans: The Korea Development Bank will offer a 4.25 trillion won low-interest loan program specifically designed for chip industry players. The bank also plans to expand its chip ecosystem fund to approximately 420 billion won next year.
• Enhanced Tax Incentives: In collaboration with the National Assembly, the government will increase tax deductions for semiconductor equipment investment. Large companies will see a 5 percentage point increase to 20 percent, while small and medium-sized enterprises will benefit from a rate of 30 percent. Further tax benefits are planned for companies expanding R&D investment.

Beyond semiconductor support, the government also highlighted its commitment to fostering growth in the artificial intelligence (AI) sector. A 4 trillion won national AI computing center is planned for completion by 2030, in partnership with the private sector. An additional 400 billion won will be invested next year to expand the nation’s AI computing infrastructure.

This multi-pronged approach demonstrates the Korean government’s commitment to maintaining its global leadership in the semiconductor and AI industries, navigating evolving geopolitical landscapes and ensuring the long-term competitiveness of its key technology sectors.