South Korea announces $19 billion aid package for chip industry

South Korea announced on May 23 a 26 trillion won ($19 billion) support package for the country's vital semiconductor industry, Reuters reports citing the country's presidential office.

Under the package, President Yoon Suk Yeol said the government planned a financial support program for chips worth about 17 trillion won through the state-run Korea Development Bank to back large-scale investments by semiconductor companies.

Yoon said a 1 trillion won fund would be set up to support equipment makers and fabless companies, which design chips but outsource their manufacturing.

Yoon also asked the industry ministry to come up with innovative measures to strengthen South Korea's competitiveness in the nonmemory chip sector, the presidential office said.

The updated support package is bigger than plans flagged by the country's Finance Minister Choi Sang-mok earlier this month when he said the government was targeting support for chip investments and research worth more than 10 trillion won.

South Korea's chip industry accounted for 18% of the country's total exports in April, though it has been lagging in some areas.

South Korea's market share of the fabless sector, which includes companies like U.S. giant Nvidia, stood at about 1% and there was a gap between South Korean chipmakers and the leading contract chipmakers like Taiwan's TSMC, Yoon's office said.

The country, which is home to the world's top memory chip makers Samsung Electronics and SK Hynix, is building a mega chip cluster in Yongin, south of the capital Seoul, touted as the world's largest high-tech chipmaking complex to attract chip equipment and fabless companies.

In January, Yoon, who has vowed to pour all possible resources into winning the "war" over chips, said he would extend tax credits on investments in the domestic semiconductor industry to boost employment and attract more talent.