South Korea Plans $10 Billion Support for Chip Manufacturers Next Year

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South Korea Plans $10 Billion Support for Chip Manufacturers Next Year

South Korea plans to increase financial support for domestic chip manufacturers next year to bolster a sector that may face negative policies from the new Trump administration and intensified challenges from Chinese competitors. The Ministry of Finance announced that financial support, consisting of loans, insurance, and guarantees from state-run enterprises, will be set at 14.3 trillion won ($10.2 billion) next year as an increase from ongoing policy incentives.

The statement also noted that the government intends to cover "a significant portion" of the 1.8 trillion won needed to bury electric cables in chip manufacturing clusters south of Seoul. In July, South Korea launched a 26 trillion won aid package, a portion of which will be reflected in next year's support amount. The announcement on Wednesday also revealed that the government plans to increase the tax credit rate for semiconductor-related firms by 10 percentage points and aims to establish a national "artificial intelligence computing center" worth 4 trillion won by 2030.

South Korea is increasing support for its most valuable economic asset during a time when President-elect Donald Trump has pledged to boost U.S. manufacturing and reduce reliance on foreign supply chains. While continuing to provide financial assistance to chip manufacturers, Trump's election has added urgency to the issue of maintaining growth in the sector.