South Korea announces comprehensive support plan to lead the world semiconductor market

The South Korean government has (finally) announced a comprehensive support plan for its semiconductor ecosystem at the Economic Ministers' Meeting on June 26.

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In a new report from Business Korea, we're learning that in order to make South Korea's position in the global semiconductor market absolutely dominant (more so than it is) will be super-powered by this new bill passing through the South Korean government.

The new initiative builds on the 26 trillion won (around $18 billion USD) direction outlined in the 2nd Economic Issue Review Meeting, which has a focus on boosting the overall competitiveness of the semiconductor ecosystem in South Korea.

A new "smooth" investment funding for semiconductor companies is planned, with a semiconductor financial support program worth 18.1 trillion won will be launched in July 2024. By 2024, the South Korean government plans to invest up to 2 trillion won in the Korea Development Bank, in order to create a 17 trillion won low-interest program, with loans to semiconductor companies starting in July 2024.

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Large companies like SK hynix and Samsung will benefit from lowered preferential interest rates, while small and medium-sized businesses (SMEs) will get lower interest rates than are available in the South Korean financial markets.

A new semiconductor ecosystem fund will also be created, further enhancing the current fund to 1.1 trillion won by 2027, to support the (massively required) scaling up and expansion of South Korean companies to meet demand. The current fund aims to raise 300 billion won by 2025 and will begin equity investments in materials, parts, and fabless companies starting in July 2024.

The South Korean government will also extend the application period for the "national strategic technology tax credit" by 3 years as well as expand its scope, which will include considering adding the advanced semiconductor materials, parts, and equipment-related technologies to the national strategic technology.

Through the revision of South Korea's current "Restriction of Special Taxation Act" enforcement decree, software rental and purchase costs, as well as rental and utilization feeds of research and development facitlies will be added to the "scope of the application" adds Business Korea.

For research personnel working on both national strategic technology and general R7D, the national strategic technology R&D credit tax rate will be "applied proportionally based on actual research hours" In order to boost the overall competitiveness of the semiconductor industry in South Korea, 5 trillion won will be investmented into R&D, commercialization, and workforce development between 2025 and 2027.l

The South Korean government will be quick to act to built large-scale R&D preliminary feasibility studies, including advanced semiconductor mass production-linked mini-fab construction projects, in order to secure global technological competitiveness.

South Korea will also expand its AI computing infrastructure, further strengthening its foundation for the "demonstration and commercialization of advanced semiconductors, including AI semiconductors," reports Business Korea.

It's not just semiconductor factories and companies getting help from the South Korean government, but infrastructure for semiconductor clusters including roads, water supply, electricity supply, will be "quickly established" with the public sector "actively sharing the costs".

Business Korea added: "The semiconductor industry is a critical component of modern electronics, essential for technologies such as AI, IoT, and 5G networks. South Korea, home to major players like Samsung Electronics and SK Hynix, has a well-established semiconductor ecosystem. The government's substantial investment in this sector underscores its strategic importance for national security and economic growth. The Economic Ministers' Meeting, a significant platform for discussing and announcing economic policies, highlights the government's commitment to maintaining South Korea's competitive edge in the global semiconductor market".