South Korean President Yoon Suk-yeol yesterday announced a record US$19 billion support plan for the country’s crucial semiconductor industry.
South Korea is home to the world’s top memorychip makers Samsung Electronics Co and SK Hynix Inc and last year pledged to build the world’s largest chip center using US$456 billion of private investment as it seeks an edge in the global industry.
"We have created a comprehensive support program 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 includes a US$7 billion investment announced earlier this month.
Photo courtesy of South Korea Presidential Office via AP
Yoon also said Seoul would extend tax benefits for chip investments, in hopes of boosting employment and attracting more talent to the industry.
The country is also building a "mega chip cluster" just outside Seoul, which the government claims will be the world’s largest semiconductor-making complex and create millions of jobs.
"As you all know, semiconductors are a field of national all-out war," Yoon said.
"Winning or losing depends on who makes the state-of-the-art semiconductors with high information processing capabilities first. The state must provide support for semiconductors so that they do not lag behind competitors," he added.
With the new package, Yoon said there would be a "new semiconductor financial support program worth 17 trillion won" 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. "I believe that these difficulties will be largely resolved through the Korea Development Bank’s support program," he added.
The plan will also create a "semiconductor ecosystem fund" worth a trillion won, which will support fabless companies and small and medium enterprises linked to 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, referring to the Taiwanese chip giant, Taiwan Semiconductor Manufacturing Co (台積電).
Semiconductors are South Korea’s leading export and hit US$11.7 billion in March, their highest level in almost two years, accounting for a fifth of South Korea’s total exports, government figures showed.
Securing supplies of advanced chips has become a crucial issue internationally, with the US and China locked in a fierce battle for control of 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."
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