The move by the Government of Korea follows reports that U.S. President Trump intends to soon unveil new tariff rates on imported semiconductors
In brief – why this matters
–South Korea has unveiled a massive KRW 33 trillion ($23.25 billion) semiconductor support plan amid rising U.S. protectionism, significantly increasing its original aid proposal to safeguard its chip sector.
–The package includes expanded infrastructure subsidies—covering up to 70% of corporate underground transmission costs and doubling budget support limits for mega-clusters.
–It also boosts domestic innovation through mini-fabs, AI chip demonstration tools, and talent recruitment, including national and international research programs to attract top semiconductor researchers.
The Government of South Korea announced a KRW 33 trillion ($23.25 billion) support package aimed at bolstering its critical semiconductor sector, as rising tensions over potential U.S. tariffs generated uncertainty for domestic chipmakers.
The move follows reports that U.S. President Donald Trump intends to soon unveil new tariff rates on imported semiconductors, having excluded them from sweeping “reciprocal” tariffs announced last Friday.
In a social media post on Monday, Trump said he would launch an investigation into the “entire electronics supply chain,” citing national security concerns.
The U.S. Department of Commerce also issued a notice saying it will begin a formal investigation to assess the national security implications of importing semiconductors, chipmaking equipment and related products.
“Assistance for the semiconductor industry, expected to be targeted by item-specific tariffs by the U.S. government, will be significantly increased from the original KRW 26 trillion to KRW 33 trillion. Over KRW 4 trillion in fiscal resources is also planned to be injected by 2026. Exceptional support will be provided for infrastructure development, including power and water supply,” Korea’s Ministry of Finance said in a statement.
The government also noted it will cover 70% of the corporate burden for undergrounding transmission lines for the semiconductor cluster in Yongin and Pyeongtaek. “The national budget support ratio for infrastructure in specialized zones for advanced strategic industries will be significantly increased to 30-50%; for large-scale clusters with investments exceeding KRW 100 trillion, the limit for national budget support will be raised from KRW 50 billion to KRW 100 billion,” it added.
The ministry also highlighted that a new investment subsidy will be introduced for SMEs producing advanced materials, components and equipment. In addition, mini-fabs, which closely resemble actual mass production environments, will be established to push forward the domestic semiconductor technology innovation platform.
“Through this supplementary budget, two additional high-performance AI semiconductor demonstration equipment units will be introduced by the end of the year for joint use by fabless companies, and the scale of demonstration projects will be stepped up by 2.5 times. The recruitment of top semiconductor talent will be strengthened through the establishment of training and research programs for early-career postdoctoral and doctoral researchers in Korea, the launch of global joint research programs to attract and retain foreign talent and the nationwide expansion of the semiconductor academy,” the ministry added.
In May 2024, South Korea had announced $19 billion in funding for the nation’s semiconductor businesses with an emphasis on chip design and contract manufacturing.
At that time, the government also stated that $12 billion was planned through state-run Korea Development Bank to back investments by semiconductor companies. The support package also included approximately $732 million to support fabless companies and semiconductor SMEs, as well as extended tax benefits for chip investments to increase employment.
South Korea is home to global chipmakers such as Samsung Electronics and SK Hynix, with semiconductors remaining one of the country’s top exports.
The two committed had previously committed to build the world’s largest chip center using $456 billion of private funding, and according to local news source Yonhap News Agency, the pair revealed plans to put $471.1 billion towards increasing chip production capacity in a 21 million square-metermega cluster.
