South Korea unveils $19 billion package to compete in global chip
'warfare'
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[May 23, 2024] By
Heekyong Yang and Ju-min Park
SEOUL (Reuters) -South Korea announced on Thursday a 26 trillion won
($19 billion) support package for its chip businesses, citing a need to
keep up in areas like chip design and contract manufacturing amid
'all-out warfare' in the global semiconductor market.
Under the package, President Yoon Suk Yeol said a financial support
programme worth about 17 trillion won was planned through state-run
Korea Development Bank to back investments by semiconductor companies,
according to the presidential office.
"As we all know, semiconductors are a field where all-out national
warfare is underway. Win or lose, that depends on who can make
cutting-edge semiconductors first," Yoon said at a meeting with top
government officials.
South Korea, home to the world's top memory chip makers Samsung
Electronics and SK Hynix, has fallen behind some rivals in areas such as
chip design and contract chip manufacturing.
South Korea's share of the global fabless sector, which is dominated by
companies like U.S. giant Nvidia that design chips but outsource
manufacturing, stood at about 1%, Yoon's office said. There was also a
gap between local chipmakers and the leading contract chip makers like
Taiwan's TSMC, it said.
Yoon said a 1 trillion won fund would be set up to support equipment
makers and fabless companies.
Industry minister Ahn Duk-geun said the government aimed to help boost
South Korea's global market share in non-memory chips, such as mobile
processors, to 10% from the current 2%.
The 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.
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Semiconductor chips are seen on a printed circuit board in this
illustration picture taken February 17, 2023. REUTERS/Florence
Lo/Illustration/File Photo
In a press briefing, Choi described South Korea's chip support
package "as good as" any other country.
Countries around the world ranging from China to the United States
have been ploughing tens of billions of dollars via grants and other
means to support their own chip sectors.
"The government is apparently trying to follow the trend where other
countries are giving out subsidies for their own chip companies,"
said Greg Roh, head of research at Hyundai Motor Securities.
South Korea 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.
Finance minister Choi said the government would streamline
bureaucracy and cut red tape to help speed up construction of the
chip cluster at twice the normal rate.
In January, Yoon, who has vowed to pour all possible resources into
the country's chip industry, said he would extend tax credits on
investments in the domestic semiconductor industry to boost
employment and attract more talent.
(Reporting by Jack Kim and Heekyong Yang; Additional reporting by
Hyonhee Shin, Ju-min Park; Editing by Ed Davies, Sonali Paul & Shri
Navaratnam)
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