South Korea on Tuesday announced a substantial increase in its support package for the domestic semiconductor industry, raising the total to 33 trillion won ($23.25 billion). This is a 25% rise from the previously announced 26 trillion won package unveiled last year. The move comes amid mounting concerns over policy uncertainty under the current U.S. administration and growing pressure from Chinese competitors.
The package includes a 20 trillion won financial assistance programme, up from the earlier 17 trillion won, according to a joint statement from key ministries, including the trade ministry. The funding is aimed at alleviating the increasing financial burden on chip manufacturers and helping them maintain competitiveness on the global stage.
Strategic Industry Facing Global Headwinds
Semiconductors are the backbone of South Korea’s export economy, contributing $141.9 billion in exports in 2024, or 21% of the nation’s total exports. China and the United States were the top markets, accounting for $46.6 billion and $10.7 billion in chip exports, respectively.
Despite dominance in memory chip production, South Korea’s major chipmakers such as Samsung Electronics and SK Hynix lag behind competitors in chip design and contract manufacturing. The government’s enhanced support aims to bridge that gap and protect the sector from global trade disruptions.
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US Tariff Pressures and Diplomatic Response
The announcement follows recent comments from U.S. President Donald Trump, who indicated plans to announce new tariffs on imported semiconductors in the coming week. While the U.S. is expected to show some flexibility toward certain companies, the impending tariffs have created uncertainty for South Korean exporters.
Finance Minister Choi Sang-mok stated that Seoul would actively engage in talks with Washington to mitigate potential fallout from the Section 232 investigations into semiconductor and biopharmaceutical imports.
In a parallel development, South Korea also announced emergency support for its automobile sector last week, including tax cuts, subsidies, and diplomatic negotiations, to soften the blow of US tariffs. The government is expected to take a similarly proactive approach in defending its semiconductor industry.
