The government also plans to cover “a significant share” of the 1.8 trillion won needed to bury power cables underground in chipmaking clusters south of Seoul. — Reuters
SEOUL: South Korea plans to bolster its financial support for domestic chipmakers next year, shoring up an industry that may face unfavourable policies from the incoming Trump administration and more intense challenges from Chinese rivals.
Financial support made up of loans, insurances and guarantees from state-affiliated organisations is set to amount to 14.3 trillion won (US$10.2bil) next year in an elevation of continued policy stimulus, the Finance Ministry said yesterday.
Separately, the government plans to cover “a significant share” of the 1.8 trillion won needed to bury power cables underground in chipmaking clusters south of Seoul, it said in a statement.
South Korea kicked off a 26 trillion won aid package in July, part of which will be reflected in next year’s support amount.
Separately, the government will seek to increase the tax credit rate for semiconductor-related firms by 10 percentage points and build a national “artificial intelligence computing centre” worth four trillion won by 2030, it said yesterday.
South Korea is stepping up its support for the crown jewel of its economy at a time when President-elect Donald Trump vows to bolster US manufacturing and reduce reliance on foreign supply chains.
While the nation has continued to funnel financial support into chipmakers, Trump’s election has added urgency to safeguarding the growth of the industry.
In its statement the ministry said there is potential for economic uncertainties to grow after the new US administration is inaugurated, even though US-South Korean ties in defence and shipbuilding could still benefit.
South Korea’s biggest company, Samsung Electronics Co, in particular is building a semiconductor factory in Texas with subsidies promised under the Biden administration’s Chips Act.
Trump’s camp repeatedly criticised that funding programme during the election campaign.
China may also ratchet up its pursuit of South Korea in supply chains, raising the need for Seoul to help shore up the competitiveness of its tech industries, the Finance Ministry said.
A rising wave of protectionist policies may also dent South Korea’s trade-reliant economy, it added.
Technology exports account for roughly a third of South Korea’s shipments abroad.
The economy is expected to be on course to grow at least 2% this year compared with 2023, particularly on the back of strong demand for semiconductors, including memory chips used in artificial intelligence development.
Forecasts among economists surveyed for next year are turning less optimistic after the export rally softened in recent months.
Officials also worry Trump could get tougher on US trading partners after he assumes office in January. — Bloomberg
