South Korea Begins $19 Billion Chip Loans and Funds Starting in July

South Korea Unveils $19 Billion Aid Package for Chipmakers

Beginning in July, South Korea will start offering substantial financial aid to chipmakers as part of a larger 26 trillion won ($19 billion) initiative aimed at enhancing a vital industry. This move, confirmed by the finance ministry, includes an 18 trillion won package that features preferential loans and investment capital. Eligible firms will gain access to a 17 trillion won loan program at the lowest market interest rates starting next month. Additionally, the government is setting up two funds totaling 1.1 trillion won, including a 300 billion won fund to be invested in local chipmaking gear and material producers by 2025, starting from next month.

South Korea is aligning itself with countries such as the US and China, which are also channeling government resources into this strategically important sector, particularly as global geopolitical tensions disrupt the chip supply chain. With technology giants like Samsung Electronics Co. and SK Hynix Inc. contributing to Korea's status as the world's leading memory chip manufacturer, the government is directing $470 billion towards the creation of a semiconductor "mega cluster" near Seoul, designed to become the core of its chip industry.

This aid package arrives amid US-led efforts to limit China's access to advanced semiconductor technologies. American authorities have urged South Korea to control the export of critical equipment and technologies vital for producing high-end logic and memory chips to China.

In support of this comprehensive plan, the South Korean government will extend tax incentives for qualifying firms for an additional three years. The authorities are also contemplating broadening the range of eligible beneficiaries to encompass manufacturers of chip materials, parts, and equipment.