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S. Korea Allocates $7 Bln to Boost Chip Industry

Sun 12 May 2024 | 08:39 PM
Israa Farhan

South Korea's Ministry of Economy and Finance announced on Sunday a package of over $7 billion to support the chip industry as part of an initiative to enhance the semiconductor sector.

This initiative follows Seoul's commitment last year to build the world's largest chip center with investments totaling $240 billion, spearheaded by South Korean giant Samsung, the world's largest memory chip manufacturer.

According to a statement from his ministry on Sunday, Minister of Economy and Finance Choi Sang-mok stated that the government is "preparing a package worth over 10 trillion won ($7.2 billion) to support semiconductor manufacturing products, chip materials, and manufacturing in all areas of chip production."

Choi addressed local chip manufacturers at a meeting on Friday, stating that the package could be formed through "a new fund financed by private and public financial institutions."

South Korea, the fourth-largest economy in Asia, is aggressively investing in six key technology sectors, including semiconductor and battery industries, where South Korean conglomerates have established dominance.

South Korea is home to Samsung and SK Hynix, leading producers of memory chips, including High Bandwidth Memory (HBM) chips used in artificial intelligence equipment.

Semiconductors are South Korea's top exports, reaching $11.7 billion in March, the highest level in two and a half years. This amount accounted for approximately 20% of South Korea's total exports, according to figures released by the Ministry of Trade.

In May 2022, Samsung unveiled a massive investment plan worth 450 trillion won ($346 billion) for the next five years aimed at making it a leader in several sectors, from semiconductors to biotech products.

South Korea, along with Japan, the United States, and European countries, is working to boost local chip production amid geopolitical concerns surrounding Taiwan, one of the world's leading chip producers, amidst competition between Washington and Beijing.

In March, the White House unveiled a package worth nearly $20 billion in grants and loans to support Intel in semiconductor production, marking the largest contribution from the administration of US President Joe Biden, aimed at countering China's dominance in this sector.

The "Science for Semiconductors Manufacturing Incentives Act" allocates around $52.7 billion to enhance this sector.

In April, Taiwan Semiconductor Manufacturing Company (TSMC), the world's leading semiconductor manufacturer, hinted at the possibility of raising prices for smart chips in the coming period, especially those produced in its factories worldwide outside Taiwan.

During the company's quarterly earnings conference for the first quarter of this year, TSMC CEO C.C. Wei stated that they would work to raise prices for chips manufactured in their facilities outside Taiwan to keep up with any industrial supply increase.