admin South Korea has announced a significant $10 billion investment to strengthen its semiconductor industry amid rising competition from China and uncertainties surrounding US trade policies. This move positions the nation to maintain its leadership in memory chip production while addressing global challenges in supply chains and technology sovereignty.
The $10 billion package, set to roll out in 2025, primarily consists of low-interest loans provided through state-run banks. A significant portion, $1.29 billion, is allocated for critical infrastructure, including power transmission lines at a new chip manufacturing hub. This hub, planned for Yongin and Pyeongtaek, aims to be the world’s most advanced semiconductor complex, attracting chip equipment manufacturers and fabless firms—companies specialising in chip design without owning fabrication facilities.
Responding to Global Competition
South Korea’s initiative aligns with global trends as nations like the US, China, and EU members ramp up domestic chip production to secure technological sovereignty. The semiconductor sector has become a focal point in advanced technologies such as AI and 5G networks, with geopolitical tensions intensifying competition.
The rapid progress of China’s semiconductor industry and changes in US policies, including potential shifts in the Inflation Reduction Act and Chips and Science Act, have added pressure on South Korea’s chipmakers, such as Samsung Electronics and SK Hynix. Both companies face declining profits due to increased competition from Chinese rivals.
To counter these challenges, South Korea is diversifying its semiconductor focus beyond memory chips into system semiconductors and foundry services. The government is also fostering innovation through a $715 million semiconductor ecosystem fund to support fabless companies and SMEs in materials, parts, and equipment.
Comprehensive Strategy for Growth
This $10 billion loan program is part of a broader $19 billion initiative announced in May 2024. The comprehensive package includes financial support, infrastructure development, R&D funding, and strategic assistance for smaller firms, aimed at elevating South Korea’s position in the global semiconductor market. By creating a robust and diverse ecosystem, South Korea is poised to maintain its competitive edge while navigating a rapidly evolving global trade landscape.
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