South Korea Boosts Semiconductor Support to $23B Amid U.S. Tariff Concerns

South Korea has expanded its support package for the semiconductor industry to 33 trillion won ($23.25 billion), marking a 27% increase from the 26 trillion won initiative announced in 2023. The move comes as global chip competition intensifies and policy uncertainties grow under the current U.S. administration.

A joint statement from multiple ministries, including the Ministry of Trade, highlighted that financial assistance for the chip sector will now reach 20 trillion won, up from the previous 17 trillion won. The goal is to help domestic chipmakers manage rising costs and enhance competitiveness in a global market increasingly dominated by Chinese rivals.

As the world’s fourth-largest economy, South Korea remains a dominant player in memory chips, led by giants Samsung Electronics and SK Hynix. However, the country is facing challenges in areas like chip design and contract manufacturing. In 2024, semiconductor exports reached $141.9 billion—21% of South Korea’s total exports—with $46.6 billion shipped to China and $10.7 billion to the U.S.

U.S. President Donald Trump recently announced plans to unveil new tariff rates on imported semiconductors, with some flexibility for certain companies. In response, South Korea’s Finance Minister Choi Sang-mok emphasized plans to engage in dialogue with U.S. officials over the Section 232 investigations into semiconductors and biopharmaceutical imports to mitigate negative effects on Korean firms.

Last week, Seoul also introduced emergency support for its auto industry, including tax cuts, subsidies, and financial assistance, aiming to cushion the impact of potential U.S. tariffs. The government reiterated its commitment to negotiating with Washington and diversifying export markets to safeguard its key industries.

This strategic funding boost underscores South Korea's resolve to remain a global leader in semiconductors amid shifting geopolitical and economic landscapes.