Athira Sethu
Kochi, 15 April 2025
South Korea has revealed an increase in its budgetary support for the chip industry, hiking the figure to 33 trillion won ($23.25 billion). This represents a 25% hike from the previous year’s 26 trillion won package. The government came to this decision in a bid to deal with fears over rising global competition and uncertainties of U.S. policies. The semiconductor sector is critical to the economy of South Korea, and such support has been viewed as imperative for South Korea’s flagship technology firms in order to remain competitive.
As part of this growth, the government will also enhance its financial support program for the semiconductor industry to 20 trillion won, from the current 17 trillion won. This will assist South Korean chip makers, such as Samsung Electronics and SK Hynix, in controlling increasing costs as they face competition with international competitors, notably those from China and the U.S.
South Korea boasts some of the world’s top memory chip producers, but it struggled in sectors like chip design and contract manufacturing. South Korea’s semiconductor shipments in 2024 reached $141.9 billion, accounting for 21% of the total exports of the nation. The largest markets are the U.S. and China, with shipments of $46.6 billion and $10.7 billion, respectively.
Former U.S. President Donald Trump recently announced intentions to impose a tariff rate on foreign semiconductors, which would affect South Korean exports. In reaction, South Korea’s Finance Minister, Choi Sang-mok, said the government would coordinate with the U.S. closely to reduce any adverse impact on domestic companies.
This additional backing for the semiconductor sector is only one aspect of South Korea’s overall plan to protect its strategic sectors. The government also rolled out emergency support for the automobile industry last week, such as financial assistance, tax relief, and attempts to open up local markets.
