Finance Minister Choi Sang-mok speaks during a meeting with other ministers in Seoul on Wednesday to announce a comprehensive package of measures to support the semiconductor industry. (Yonhap)
South Korea unveiled a comprehensive package of support measures for the semiconductor industry Wednesday, with its top economic policymaker highlighting "growing headwinds" amid concerns over potential shifts in US trade policy under the incoming Donald Trump administration and intensifying 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 during a meeting with economy-related ministers focused on enhancing the global competitiveness of local industries.
"Given the current challenges, including global economic shifts under the incoming US 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 US industrial policy that could significantly affect the semiconductor sector.
Trump has indicated plans to impose tariffs of up to 20 percent on all imports and signaled 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 China's rapid technological advancements and its drive to dominate global supply chains as key challenges.
In response, Seoul plans to provide fiscal assistance, tax incentives, and other measures to bolster the semiconductor ecosystem, according to the finance ministry.
The government plans to subsidize a significant portion of the costs associated with burying transmission cables for semiconductor clusters in Yongin and Pyeongtaek, south of Seoul. The project, requiring parliamentary approval, is expected to cover around 60 percent of the estimated 3 trillion-won ($2.14 billion) infrastructure investment.
"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 added that the infrastructure for the Yongin cluster, expected to support operations beginning in 2027, will include facilities capable of providing 10 gigawatt-hours of electricity and 1.33 million tons of water daily. The ministry aims to expedite the implementation of private investments totaling 600 trillion won.
Tax deductions for research and development and facility investments in the semiconductor industry will also be increased. 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, including low-interest loans through state-affiliated banks and other financial support for semiconductor manufacturers.
To address workforce challenges, the government plans to expand graduate programs specializing in semiconductors and explore ways to attract more foreign talent, the ministry said. (Yonhap)
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