Finance Minister Choi Sang-mok (C) visits a semiconductor company in Seongnam, south of Seoul, on Nov. 27, 2024, in this photo provided by the ministry. (Image courtesy of Yonhap)
SEJONG, Nov. 27 (Korea Bizwire) — South Korea put forward a comprehensive package of support measures for the semiconductor industry Wednesday, with its top economic policymaker highlighting “growing headwinds” amid concerns of potential shifts in U.S. trade policy under the incoming Donald Trump administration and rising competition from Chinese rivals.
“The next six months will be the ‘golden time’ that will decide the fate of our industries,” Finance Minister Choi Sang-mok said in a meeting with economy-related ministers aimed at enhancing the global competitiveness of local industries.
“Given the current challenges, including global economic shifts under the incoming U.S. administration, competition from emerging countries and the rapid reorganization of global supply chains, the role of the government must evolve from a ‘supporter’ to a ‘player’ working alongside businesses,” he added, according to his ministry.
South Korea, home to leading global memory chipmakers Samsung Electronics Co. and SK hynix Inc., faces uncertainties over possible tariff increases and changes in U.S. industrial policy that could significantly impact the semiconductor sector.
Trump has said he plans to impose tariffs of up to 20 percent on all imports, while also signaling intentions to roll back subsidies for semiconductors and electric vehicles introduced under the Joe Biden administration in an effort to reduce reliance on foreign supply chains.
Choi emphasized the growing uncertainty in the chipmaking industry, also citing intensifying competition from emerging nations. The finance ministry highlighted China’s rapid technological advancements and its drive to dominate global supply chains.
In response, Seoul plans to provide various support for South Korean semiconductor firms that will include fiscal assistance and tax incentives, among other support measures, to help bolster the semiconductor ecosystem, according to the finance ministry.
First, the government plans to alleviate the financial burden on chipmakers by subsidizing a significant portion of the costs associated with burying transmission cables for semiconductor clusters in Yongin, just south of Seoul, and Pyeongtaek, located some 65 kilometers south of Seoul.
The plan, which requires parliamentary approval, aims to cover around 60 percent of the estimated 3 trillion-won (US$2.14 billion) infrastructure project.
“The final share of government support is still under review but will likely exceed half of the total cost,” a ministry official said.
The industry ministry later said the government will accelerate its efforts to build the needed infrastructure for the Yongin cluster that will be capable of providing 10 gigawatt-hours of electricity and 1.33 million tons of water daily.
“We will promptly establish infrastructure for the Yongin cluster to support operations expected to begin in 2027 and expedite the implementation of private investments totaling 600 trillion won,” it said in a statement.
Tax deductions for research and development (R&D) and facility investments in the semiconductor industry will also be increased, according to the finance ministry.
Currently, large and midsized companies benefit from a 15 percent tax deduction, while small businesses receive a 25 percent deduction under the national strategic technology framework.
For 2025, the government has earmarked over 14 trillion won for policy financing programs, such as low-interest loans “from state-affiliated banks” and other financial support for semiconductor manufacturers.
To tackle the workforce challenges in the industry, the government plans to expand graduate programs specializing in semiconductors and explore ways to bring in more foreign talents, the ministry said.
(Yonhap)
