South Korea will begin providing 14 trillion won ($10 billion) in low-interest loans next year to support its semiconductor industry, according to the South Korean Ministry of Finance.
State-run banks will handle the loans; 1.8 trillion won will be used to finance new semiconductor manufacturing complicated electrical transmission lines.
Aiming at improving local semiconductor production, the proposal adopts a larger 26 trillion won ($19 billion) package announced in June. That scheme calls for creating two funds totaling 1.1 trillion won and extending tax benefits to qualified businesses.
Leading worldwide in memory chip manufacture, South Korea's semiconductor sector is centered on SK Hynix and Samsung Electronics (SSNLF, Financials). This most recent action is in line with initiatives by other nations, including the United States, China, Japan, and the European Union, to support home semiconductor production in the face of growing artificial intelligence and advanced technology competition.
China's access to sophisticated semiconductor technologies has been restricted by the United States and allies like South Korea, Japan, and the Netherlands. The U.S. urged South Korea in April to restrict the equipment and technology flow for high-end chipmaking to China.
To attract chip equipment and fabless businesses, South Korea is building what it claims to be the world's most high-tech chipmaking cluster in Yongin and Pyeongtaek, close to Seoul.
The ministry also highlighted potential challenges, noting that South Korea expects major changes in the industrial environment and trade scene worldwide upon Trump's inauguration.
Citing issues with illegal immigration and drug trafficking, President-elect Trump revealed earlier this week intentions to levy a 25% tariff on all goods from Mexico and Canada and an extra 10% tax on goods from China.
