South Korea unveils $19bn chip sector support package

• South Korea has unveiled a domestic chip sector support package worth 26tn won ($19bn)
• The country’s government wants to ensure it doesn’t fall behind in what it calls a global semiconductor industry “battle”
• But unlike similar support initiatives in the US and Taiwan, vendor subsidies are not part of the deal 

Following an Economic Issue Review Meeting, during which “participants collectively recognised the need for the government and related agencies to take a more proactive action to establish Korea’s semiconductor supremacy amid the intensified battle in the global semiconductor industry,” the South Korean government has unveiled a “semiconductor support package” worth 26 trillion won ($19bn). 

“This package will cover the entire semiconductor ecosystem, ranging from manufacturing facilities, fabless and… equipment fields to human resources,” the government announced. 

The move mirrors efforts being made in other countries, including the US, where the government is ploughing billions in subsidies into companies, such as Intel, South Korea’s Samsung and Taiwan’s TSMC, that are building new chip production facilities in the country as a result of its Chips and Science Act. 

However, the support from the South Korean government isn’t coming in the form of subsidies: Instead, it’s mainly loans at “preferential interest rates” and tax credits, along with some investments in supporting infrastructure such as roads and water supplies to key chip manufacturing zones, such as the Yongin zone, where the government is aiming to incentivise massive private investments over the next 20 years. 

But as this Business Korea report notes, direct subsidies are the order of the day in Taiwan as well as the US and China and without such efforts, South Korea becomes a less attractive location for chip vendors planning to build new production facilities. South Korea’s ruling politicians disagree, of course: Choi Sang-mok, deputy prime minister and minister of economy and finance, who announced the support package, said he believes “our incentives are not lacking compared to any other country,” but chip sector executives beg to differ.

- Ray Le Maistre, Editorial Director, TelecomTV