[News] South Korea Reportedly Unveils USD 19 Billion Semiconductor Subsidy to Boost R&D and Infrastructure … – Press Center | TrendForce – Market research, price trend of DRAM, NAND Flash, LEDs, TFT-LCD and green energy, PV
According to a report from CNA, the South Korean government has announced a comprehensive support plan for the semiconductor industry, amounting to KRW 26 trillion (roughly USD 19 billion). The plan includes substantial financial support, expansion of semiconductor parks, infrastructure development, and investment in R&D and talent cultivation, aimed at revitalizing the economy and improving livelihoods.
Reportedly, South Korean President Yoon Suk Yeol chaired the second economic review meeting, where this semiconductor industry support plan was unveiled. The centerpiece of the plan is a KRW 17 trillion financial support program provided by the Industrial Bank of Korea, designed to alleviate potential funding challenges that companies may face when constructing new factories, production lines, and equipment.
The tax reduction incentives, originally set to expire this year, is said to be extended, allowing semiconductor companies to partially offset their R&D and equipment investment costs against income taxes. Yoon stated that the Tax reduction incentives encourage companies to expand their investments, benefiting not only the companies themselves but also creating more quality job opportunities.
He emphasized that over 70% of the support will be directed towards small and medium-sized enterprises (SMEs), rather than just large corporations. Yoon further expressed that as the economy grows, tax cuts will actually generate more tax revenue.
Additionally, a KRW 1 trillion semiconductor ecosystem fund will be established to support smaller semiconductor SMEs with specialized technologies in wafer design, materials, components, and equipment, helping them to become world-class enterprises.
President Yoon also instructed to expedite the construction of semiconductor mega-parks and pledged cooperation with various government agencies to accelerate the resolution of infrastructure needs such as electricity, water, and external roads for the industry.
Particularly concerning the critical issue of power supply affecting yield rates, the government will intensify communication with the parliament to expedite the passage of a special law regarding grid use, which can significantly shorten the construction time for power transmission lines.
Investments in infrastructure are expected to exceed KRW 2.5 trillion, with the construction time for industrial parks projected to be reduced from 7 years to 3.5 years. Additionally, there is a plan to allocate KRW 5 trillion for manpower development from 2025 to 2027, a significant increase from the KRW 3 trillion allocated from 2022 to 2024.
President Yoon pointed out that the future success of the semiconductor industry hinges on system semiconductors, which account for two-thirds of the overall market.
Therefore, the government must collaborate with businesses to propose groundbreaking initiatives to enhance the competitiveness of system semiconductors, ensuring a dominant position in the international market. This comprehensive support plan is expected to be formally implemented shortly after finalization, potentially as early as mid-June.
As per a report from the Korean media outlet TheElec, a semiconductor fund initially planned at 300 billion won has been expanded to KRW 1.1 trillion. The original 7-year construction plan for the semiconductor cluster will be halved, according to South Korea’s Deputy Prime Minister Choi Sang-mok.
The remaining portion of the KRW 26 trillion investment will reportedly be dedicated to fostering researchers in the semiconductor field. South Korean chipmakers Samsung and SK Hynix welcomed the announcement, emphasizing the need for ongoing government support.
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(Photo credit: Samsung)