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South Korea Sets Aside Record $19 Billion to Fuel Chipmaking

In Technology
May 23, 2024

(Bloomberg) — South Korea has unveiled a $19 billion package of incentives to bolster its chip sector, a boon to Samsung Electronics Co. and SK Hynix Inc. as they race to stay ahead in an increasingly competitive industry.

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The 26 trillion won program includes 17 trillion won of financial support for certain investments as well as tax incentives, the presidential office said in a statement. 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% in Seoul after the announcement. Other semiconductor stocks had climbed in Asia in the wake of Nvidia Corp.’s earnings blowout. SK Hynix’s stock extended its morning gains and was up about 3% after the news.

The record program follows calls to support the local chip industry as governments from the US to China spend billions to attract and propel manufacturing projects by the likes of Taiwan Semiconductor Manufacturing Co. and Intel Corp. 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.

Korea, the world’s biggest memory chip producer, has long preferred private conglomerates such as Samsung and SK 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.

Read More: Global Chips Battle Intensifies With $81 Billion Subsidy Surge

(Updates with share action in the third paragraph)

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