Visitors look at the display of SK Hynix Inc. 12-layer HBM3E memory chips at the Semiconductor Exhibition (SEDEX) in Seoul, South Korea, on Wednesday, Oct. 23, 2024.
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South Korea announced Tuesday a support package of 33 trillion won ($23.25 billion) for its vital semiconductor industry, as heightened uncertainty over U.S. tariffs threatens domestic companies.
This comes after U.S. president Donald Trump reportedly said he would be announcing the tariff rate on imported semiconductors soon, after exempting them from his steep “reciprocal” tariffs last Friday.
In a social media post Monday, Trump vowed to investigate the “whole electronics supply chain” on national security grounds.
The U.S. Department of Commerce also released a notice saying it will initiate an investigation “to determine the effects on national security of imports of semiconductors, semiconductor manufacturing equipment, and their derivative products.”
South Korea’s funding support was about a quarter more than the 26 trillion committed last year, according to a press release from the finance ministry.
As part of the measures, the government will subsidize the construction of underground power transmission lines to semiconductor clusters, as well as increase the funding ratio for infrastructure in advanced industrial complexes to 50% from 30%.
A total of 20 trillion won of low-interest loans to semiconductor companies will be offered between 2025 and 2027, up from the current 17 trillion won.
Other measures include introducing training and research programs for domestic master’s and doctoral students as well as global joint research programs for foreign talent.
South Korea is home to some of the world’s top chipmakers, including Samsung Electronics and SK Hynix, with semiconductors a key export of the country.
On Tuesday, the South Korean Kospi was up 0.68%, with Samsung climbing 1.07% and SK Hynix up 0.17%.
In 2024, South Korea’s exports of semiconductors stood at $141.9 billion, just over 20% of the country’s $683.6 billion exports.
The U.S. is the second largest export destination for South Korea, with exports rising 10.5% year-on-year to $127.8 billion in 2024, reaching a new annual high for the seventh consecutive year.
On Monday, acting South Korean president Han Duck-soo reportedly said that Trump had “apparently” instructed his administration to conduct immediate tariff negotiations with South Korea, according to local media outlet Yonhap.
Daniel Yoo, head of the global investment department at Yuanta Securities, said the move was a “sovereign effort to boost the semiconductor industry,” given that Seoul’s efforts at shoring up its semiconductor sector were slower compared to other countries.
“Definitely, it is positive news to keep the #1 market share in the memory side of the semiconductor industry,” Yoo added.
If semiconductor plants need to be built in the U.S., smaller and medium enterprises will need to move to the U.S. “Therefore, government support is most needed. I am not sure that is enough, but surely needed support that other competitors were getting from their countries.”