South Korea seeks to accelerate support for the chip industry's development.

According to a statement from the Ministry of Economy and Finance on May 12, South Korea's Finance Minister Choi Sang-mok stated that the country is preparing a plan to provide over 10 trillion won (approximately $7.3 billion) to strengthen its key semiconductor industry.

In a statement, the Ministry of Economy and Finance said that the plan may include providing policy loans and establishing a new fund financed by state and private financial institutions, such as setting up a fund through joint investment by the government, the private sector, and the Korea Development Bank (KDB) policy financing.

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The Ministry also stated that it will actively consult with the National Assembly to extend the national strategic technology investment tax credit, which is set to end this year, and consider expanding the scope of the national strategic technology R&D and investment tax credit.

In recent years, South Korea has been planning a so-called "semiconductor mega-cluster," aiming to establish a large chip cluster south of Seoul by 2047. As envisioned, the cluster will become the world's largest high-tech complex of its kind, focusing on cutting-edge products.

Specifically, the South Korean government plans to establish a fabless industry exclusive zone in Pangyo and build wafer fabs and storage chip production facilities in Hwaseong, Yongin, Icheon, and Pyeongtaek.

South Korea has also decided to build a material, component, and equipment industrial park in Anseong and R&D facilities in Gyeonggi and Suwon. According to the plan, the area currently has 21 manufacturing plants, and an additional 16 plants, including 3 research facilities, are expected to be added by 2047.

The Minister of Industry, Trade, and Resources, Ahn Duk-geun, stated: "Completing the semiconductor super-cluster at an early date will secure a world-leading competitive edge in the chip field and provide quality employment opportunities for the younger generation."

Specifically, Samsung Electronics plans to invest 50 trillion won, which includes: investing 36 trillion won to build 6 wafer fabs in Yongin, 33 kilometers south of Seoul; investing 12 trillion won to build 3 wafer fabs in Pyeongtaek, 54 kilometers south of Seoul; and investing 2 trillion won to build 3 R&D facilities in Giheung.SK Hynix will invest 122 trillion won to build four new chip fabs in Yongin. The South Korean government plans to create a world-class production capacity centered around cutting-edge products such as 2-nanometer process chips and high-bandwidth memory, based on private investment.

The Ministry of Trade, Industry, and Energy also stated that this 622 trillion won project will create 3.46 million jobs. The South Korean government expects that by 2030, South Korea's share of the global non-memory chip market will rise significantly from the current 3% to 10%.

With the construction of large industrial clusters, the South Korean government pledges to support this ecosystem by increasing the self-sufficiency rate of key materials, components, and equipment supply chains from the current 30% to 50% by 2030.

South Korean President Yoon Suk-yeol emphasized that foreign companies are flocking to seek business opportunities in the semiconductor super cluster. Thanks to this, while foreign direct investment from various countries has been halved, only South Korea set a new record in attracting foreign direct investment last year.

Yoon also stated that a single wafer foundry requires a nuclear power unit with a capacity of 1.3 gigawatts, and the chip industry requires high-quality and stable power supply, making nuclear power plants indispensable. If the country goes down the "nuclear phase-out" path, not only semiconductors but also other high-tech industries would have to be abandoned. To develop livelihoods, the nuclear power industry should continue to develop.

Regarding the semiconductor investment tax credit policy that is due to expire this year, Yoon indicated that the government will extend the validity period of the relevant laws and continue to implement investment tax credit policies. This policy will further stimulate investment in semiconductor companies, increase the benefits of the related ecosystem and all enterprises, create job positions, and increase national tax revenue.

A recent analysis report shows that as the United States introduces semiconductor manufacturing facilities through the CHIPS and Science Act, the global chip supply chain will be reorganized with the United States at the center about 10 years later.

The Semiconductor Industry Association (SIA) and Boston Consulting Group (BCG) released a report titled "Resilient Recovery in the Semiconductor Supply Chain," which suggests that as the United States expands its share in the high-end digital (non-memory) chip sector, which was originally dominated by Taiwan and South Korea, it is expected that the U.S. share in the digital chip sector below 10nm will increase significantly from 0% in 2022 to 28% by 2032, while South Korea's share will plummet from 31% in 2022 to 9% by 2032. Although South Korea's position in the most cutting-edge logic chip market has declined, the DRAM market, including high-bandwidth memory (HBM), is expected to surge due to the rapid growth in AI chip demand, and South Korea's DRAM production capacity will further expand from 52% in 2022 to 57% by 2032. The report states: "South Korea invested early in the development of the chip industry, supporting Samsung and SK Hynix to grow into global chip leaders, holding more than half of the global NAND flash and DRAM market shares."

In recent months, South Korean chip sales have been very active, leading to a rebound in overall exports. Data shows that South Korea's exports in March of this year increased by 3.1% year-on-year, reaching 56.56 billion USD, with a continuous increase in monthly exports for six consecutive months. During the same period, imports were 52.28 billion USD, a decrease of 12.3% year-on-year. As a result, the trade balance in March achieved a surplus of 4.28 billion USD. The monthly trade balance has maintained a surplus for ten consecutive months since June of last year.

Furthermore, according to statistics from the South Korean Ministry of Science and Technology, South Korea's semiconductor export volume in February 2024 increased by 62.9% year-on-year, reaching 9.96 billion USD. Among them, the export volume of memory chips was 6.08 billion USD, a year-on-year increase of 108.1%; the export volume of logic chips was 3.42 billion USD, a year-on-year increase of 27.2%.The analysis indicates that this shows South Korea's overall industrial production growth has exceeded expectations. Given that semiconductors account for the largest share of South Korea's exports, this positive data also suggests a strong momentum for economic growth within the country.