South Korea Plans $12 Bn Support Package For Local Semiconductor Industry

South Korea has unveiled a support package aimed at supporting its semiconductor industry amidst intensifying global competition. Announced by the finance ministry, the package is valued at 26 trillion won (USD 12.22 billion).

Key components of the initiative include the provision of low-interest loans amounting to 17 trillion won, scheduled for distribution next month. This funding is positioned to incentivise both domestic and foreign companies to invest in the local semiconductor sector, representing a substantial increase from previous policy financing efforts.

In addition to financial support, South Korea plans to establish a 1.1 trillion won fund dedicated to nurturing the semiconductor ecosystem, particularly focusing on fabless companies and chip material providers. 

Further, the support package includes measures to extend tax benefits aimed at encouraging investments in national strategic technologies. The proposed extension will sustain a tax credit scheme offering deductions of up to 15 per cent for facility investments and up to 50 per cent for research and development projects in critical sectors such as semiconductors, rechargeable batteries, and display technologies.

Looking ahead, the government said it is looking to allocate 5 trillion won from 2025 to 2027 towards talent development for semiconductor research and development projects. This investment represents a significant increase compared to previous funding periods.

Additionally, the industry ministry said it plans to invest 274.4 billion won in research and development initiatives focused on semiconductor packaging technologies. This initiative, spanning from 2025 to 2031, aims to enhance the competitiveness of cutting-edge products like high bandwidth memory chips, crucial for maintaining South Korea's technological edge in the global semiconductor market.