South Korea sets aside record $25.7 billion to fuel chipmaking

3 weeks ago 41

Updated

May 23, 2024, 12:37 PM

Published

May 23, 2024, 12:30 PM

SEOUL - South Korea has unveiled a 26 trillion won ($25.7 billion) package of incentives to bolster its chip sector, a boon to Samsung Electronics and SK Hynix as they race to stay ahead in an increasingly competitive industry.

The programme includes 17 trillion won of financial support for certain investments as well as tax incentives, the presidential office said in a statement on May 23. The total is more than double the 10 trillion won Finance Minister Choi Sang-mok had proposed less than two weeks ago.

Shares in Samsung reversed earlier losses to gain as much as 1.4 per cent in Seoul after the announcement. Other semiconductor stocks had climbed in Asia in the wake of Nvidia’s earnings blowout. SK Hynix’s stock extended its morning gains and was up about 3 per cent after the news.

The record programme follows calls to support the local chip industry, as governments from the United States to China spend billions to attract and propel manufacturing projects by the likes of Taiwan Semiconductor Manufacturing Co and Intel. That global spending spree is accelerating as Washington-Beijing tensions threaten to snarl global supply of components critical to most modern devices and the military.

South Korea, the world’s biggest memory chip producer, has long preferred private conglomerates such as Samsung and SK Hynix to lead investment efforts. But the government is now playing a more active role and has led plans to erect a mega-cluster of chip plants located outside of Seoul. BLOOMBERG

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