South Korean government considering semiconductor subsidies for the first time

The South Korean government is considering subsidies for the semiconductor industry. The government reportedly decided to review the provision of subsidies for South Korea's wide-ranging high-tech industries, including the semiconductor industry.

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This would be a first for South Korea, where on March 27, the government discussed a comprehensive support plan for specialized clusters in advanced strategic industries based on the proposals at the 5th National Advanced Strategic Industry Committee, which was held at the South Korean Government Complex in Seoul and chaired by Prime Minister Han Duck-soo.

In a new report from Business Korea, the outlet reports that the South Korean government said: "The competition for investment subsidies among rival countries is intensifying," and that "in addition to the current investment incentive support, we will continue to review the expansion of incentive systems for advanced investments".

A high-ranking government official mentioned: "The final possibility of realization should be seen as fifty-fifty," also noting that "extending the investment tax deduction for semiconductors, which expires at the end of the year, is basic, and we are reviewing the payment of subsidies".

Right now, South Korea does not have separate semiconductor subsidies, where they only provide up to 25% investment tax deduction for national strategic technologies. The South Korean government is now actively supporting private investments within specialized clusters for advanced strategic industries, with a required investment of 681 trillion won by 2027, which works out to around $500 billion USD.

The South Korean government has plans for 2024 to increase the budget for semiconductor sector support to 1.3 trillion won (or around $1 billion USD) while concentrating on supporting infrastructure and investment environments, ecosystems, ultra-leading technologies, and talent development.

South Korea is a major hub for the technology and AI industries, with both SK hynix and Samsung in teh country, as well as LG. SK hynix provided all of the HBM3 memory supply to NVIDIA for its Hopper H100 AI GPU, and has ultra-fast HBM3E memory at the ready for Hopper H200 and NVIDIA's just-revealed Blackwell B200 AI GPU.

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SK hynix recently planned a gigantic $90 billion investment towards the "world's largest mega fab complex" in South Korea, which will be fully complete in 2046. LG recently announced an equally as large $74 billion into South Korea between now and 2028, where the company will develop new AI chips, batteries, biotechnology, clean tech, and displays.

Intel has been spending a lot in the US and enjoying massive government subsidies through the Biden administration and the ongoing CHIPS Act, bringing US semiconductor leadership to the United States. TSMC (Taiwan Semiconductor Manufacturing Company) continues to reap in the success of chip-makers like AMD, Intel, Qualcomm, NVIDIA, Apple, and more.

ASML has its new High-NA EUV lithography machine ready, with Intel being its first customer in the US to receive ASML's bleeding-edge $380 million EUV machine. Now it seems the South Korean government is moving to a stance like the US and other countries, pumping billions of dollars into the semiconductor industry preparing for an AI-fueled future.