$23 Billion - South Korea Expands Its Chip Development Program

Reaction to US Customs Policy $23 Billion - South Korea Expands Its Chip Development Program

2025-04-15 From Sebastian Gerstl | Translated by AI 2 min Reading Time

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The South Korean government has announced that it will increase the subsidy program for the domestic chip industry from 26 trillion won (approx. $18 billion) to 33 trillion won (approx. $23 billion). The measure is a reaction to the volatile tariff policy of the USA.

The South Korean government in Seoul wants to increase its billion-euro investment package in the chip industry by a quarter in order to offset the current uncertainties of US tariff policy. The semiconductor market is one of the country's most important economic sectors, with annual exports amounting to around 125 billion euros.(Image: freely licensed / Pixabay) — The South Korean government in Seoul wants to increase its billion-euro investment package in the chip industry by a quarter in order to offset the current uncertainties of US tariff policy. The semiconductor market is one of the country's most important economic sectors, with annual exports amounting to around 125 billion euros.
(Image: freely licensed / Pixabay)

Only last year, South Korea decided to increase the state investment package for the domestic chip industry to $18 billion. Now, at the urging of local industry, the government has decided to increase the funding program by a quarter. The measure is a reaction to increased competition from China and the ongoing uncertainty in the electronics market due to the US government's fickle customs policy, reports the news agency Reuters, among others.

In addition, there are plans to increase a financial aid program for the chip industry to 20 trillion won (14 billion USD) from the previous 17 trillion won (12 billion USD), according to a statement from the trade ministry. These subsidies for the chip market, which is essential for the South Korean economy, are intended to help local companies to cope with rising costs in international competition.

Increase in subsidies despite apparently strong positions

South Korea is the fourth largest economy in Asia. Samsung was recently ranked as the chip company with the highest turnover on the global market, but according to its own estimates, in terms of semiconductor production and having fallen behind in the trend market of artificial intelligence. In 2024, South Korea's semiconductor exports amounted to 141.9 billion US dollars (around 125 billion euros), which corresponds to 21% of the country's total exports, according to government data. Deliveries to China accounted for USD 46.6 billion and exports to the USA for USD 10.7 billion.

US President Donald Trump announced on Sunday that he would announce the tariff rate on imported semiconductors over the course of next week. When asked by reporters, he added that there would be "flexibility" for some companies in the sector, without elaborating on what this meant. Samsung, which has set up a fab in Texas to manufacture chips using the 3-nanometer process, is hoping for corresponding relief in the cross-border production chain.

Last week, South Korea had already announced emergency aid for its automotive sector in order to mitigate the impact of the US tariffs on this sector. The measures include financial support for the automotive industry as well as tax cuts and subsidies to boost domestic demand. The government will increase financial aid for the automotive industry this year from the previously planned 13 trillion won (approx. 9 billion USD) to 15 trillion won (approx. 10.3 billion USD) to prevent liquidity problems.(sg)

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