South Korea has announced a groundbreaking $19 billion plan to support its chip sector, providing a significant boost to companies like Samsung Electronics Co. and SK Hynix Inc. as they strive to maintain their lead in an increasingly competitive industry.
The program, totaling 26 trillion won, includes 17 trillion won of financial aid for specific investments and tax incentives, according to a statement from the presidential office. This amount surpasses the initial proposal of 10 trillion won made by Finance Minister Choi Sang-mok just two weeks ago. Following the announcement, shares in Samsung and SK Hynix rose by approximately 1%.
The global chip industry is witnessing an unprecedented surge in government support as countries like the US and China invest billions of dollars to attract and propel manufacturing projects by major players such as Taiwan Semiconductor Manufacturing Co. and Intel Corp. This trend is gaining momentum due to escalating tensions between Washington and Beijing, which pose a threat to the supply of crucial components for modern devices and military applications.
Previously, South Korea, the largest producer of memory chips worldwide, had relied on private conglomerates like Samsung and SK to drive investment efforts. However, the government is now taking a more proactive approach and leading initiatives to establish a mega-cluster of chip plants located outside of Seoul.