South Korea yesterday announced plans to invest almost US$5 billion extra in the country’s semiconductor industry, citing “growing uncertainty” over US tariffs.
The country is a major exporter to the US and its powerhouse chip and auto industries would suffer a hefty hit from US President Donald Trump’s threatened 25 percent levies.
Concerns about the sector have hammered the Seoul-listed shares of the world’s largest memory chip maker Samsung, and largest memory chip supplier SK Hynix.
Photo: AP
Officials have now stepped up to provide more cover for the economically crucial industry by announcing that an extra US$4.9 billion would be pumped into it through next year.
“An aggressive fiscal investment plan has been devised to help local firms navigate mounting challenges in the global semiconductor race,” the South Korean Ministry of Finance said in a press release.
It warned that “growing uncertainty” following rounds of US tariff threats had left the sector clamoring for government support.
“To foster a dynamic, private sector-led ecosystem for semiconductor innovation and growth, the government will increase its investment in the sector from 26 trillion won (US$18.2 billion) to 33 trillion won,” the ministry said.
Trump announced on his April 2 “Liberation Day” sweeping tariffs on its global trading partners, including the 25 percent on South Korean goods, before backtracking and suspending their implementation for 90 days.
Even so, “duties targeting specific sectors such as semiconductors and pharmaceuticals, remain on the horizon,” South Korean Minister of Finance Choi Sang-mok said during a meeting.
“This grace period offers a crucial window to strengthen the competitiveness of South Korean companies amid intensifying global trade tensions,” he added.
“The government plans to expand support for the semiconductor industry, allocating 33 trillion won, with over 4 trillion won in fiscal spending set to be injected through 2026,” he said.
The package includes funding for infrastructure development, including underground transmission lines at semiconductor clusters that are currently being built.
“The government will boldly support investment by semiconductor companies,” Choi said, adding that the package included securing talent for the industry.
The investment is part of a large revised supplementary budget proposal of 12 trillion won and requires the approval of the National Assembly.
The tariffs announcement has rocked global markets, with investors uncertain over whether they are a negotiating tactic or permanent US position.
Trump has insisted he would not back down until he has reduced or even wiped out US trade deficits — while simultaneously signalling that he is ready to negotiate.
The US trade deficit with South Korea was US$66 billion in goods last year.
Seoul last week unveiled a US$2 billion emergency support package to help automakers weather the storm.
Still, analysts said that for now, South Korea should not be too worried about its chip sector. “Unlike automobiles, which are already subject to tariffs, semiconductors are unique in that the United States lacks viable substitutes,” Sejong University professor Kim Dae-jong said.
“Our companies are building large-scale semiconductor plants in the US, contributing to local job creation, a point that will likely be emphasized,” Kim added. “Behind-the-scenes negotiations will likely continue, and there is a chance they could conclude on a positive note. There also remains the possibility that tariffs will be adjusted item by item in the future.”
MANAGING RISKS: Taiwan has secured LNG sufficient to cover 95 percent of electricity demand for next month, UBS said, describing the government’s approach as proactive UBS Group AG has raised its forecast for Taiwan’s economic growth this year to 8 percent, up from 6.9 percent previously, and said expansion could reach as high as 8.6 percent if external energy shocks are avoided. The upgrade reflects a stronger-than-expected first-quarter performance and sustained momentum in artificial intelligence (AI)-driven exports, which UBS said are providing a firm foundation for growth despite geopolitical and energy risks. Taiwan’s GDP expanded 13.69 percent year-on-year in the first quarter, the fastest growth since the second quarter of 1987, the Directorate-General of Budget, Accounting and Statistics (DGBAS) reported on Thursday. On a seasonally
Ryanair, Transavia, Volotea and other low-cost airlines are feeling the financial pain from high jet fuel prices as a result of the Middle East war and are cutting flights. The closure of the Strait of Hormuz has taken a huge chunk of oil supplies off the market, sending the price of jet fuel soaring and triggering fears of shortages that could force airlines to cancel flights. Airlines are not waiting for a lack of supplies to react. “Travel alert: Airlines are cutting thousands of flights right now,” Travel Therapy host Karen Schaler said in an Instagram reel this past weekend.
Shares of Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) have repeatedly hit new highs, but an equity analyst said the stock’s valuation remains within a reasonable range and any pullback would likely be technical. The contract chipmaker’s historical price-to-earnings (P/E) ratio has ranged between 20 and 30, Cathay Futures Consultant Co (國泰證期) analyst Tsai Ming-han (蔡明翰) told Central News Agency. With market consensus projecting that TSMC would post earnings per share of about NT$100 (US$3.17) this year, supported by strong global demand for artificial intelligence (AI) applications, and the stock currently trading at a P/E ratio of below 25, Tsai said the valuation
The list of Asian stocks that benefit from business partnership with Nvidia Corp is getting longer, as the region further integrates into the artificial intelligence (AI) chip giant’s business ecosystem. Just in the past week, South Korea’s LG Electronics Inc, Taiwan’s Nanya Technology Corp (南亞科技), as well as China’s Huizhou Desay SV Automotive Co (德賽西威) and Pateo Connect Technology Shanghai Corp (博泰車聯) have become the latest to rally on news of tie-ups, supply-chain participation or product collaboration with the US chip designer. Asian suppliers account for about 90 percent of Nvidia’s production costs, up from about 65 percent last year, data compiled
RSS