Amid “all-out warfare” in the global semiconductor industry, South Korea announced on Thursday a 26 trillion won ($19 billion) assistance package for its chip industries. The country cited the necessity to be competitive in sectors like chip design and contract production.

According to the presidential office, President Yoon Suk Yeol said under the package that a financial support programme of around 17 trillion won was planned through the state-run Korea Development Bank to boost investments made by semiconductor businesses.

“As everyone is aware, there is a full-scale national conflict going on in the semiconductor industry. Whoever can produce cutting-edge semiconductors first will determine whether they win or lose, Yoon stated at a meeting with senior government representatives.

The leading memory chip manufacturer in the world, Samsung Electronics, is based in South Korea, where SK Hynix has lagged behind certain competitors in areas like contract chip production and chip design.

According to Yoon’s office, South Korea’s percentage of the global fabless market, which is dominated by businesses like the massive American corporation Nvidia that design chips but outsource manufacture, was about 1%. Additionally, it stated that there was a difference between local chipmakers and top contract chip manufacturers like Taiwan’s TSMC.

Yoon announced the creation of a 1 trillion won fund to assist fabless and equipment manufacturers.

The government wants to assist increase South Korea’s share of the worldwide market for non-memory chips, such mobile CPUs, from the current 2% to 10%, according to Industry Minister Ahn Duk-geun.

The deal exceeds the intentions announced earlier this month by the nation’s finance minister, Choi Sang-mok, who stated that the government intended to provide support for research and investments in chips valued at over 10 trillion won.

Choi called South Korea’s chip assistance package “as good as” that of any other nation at a news briefing.

Tens of billions of dollars have been invested by nations, from China to the US, through grants and other channels to assist their own chip industries.

“The government is apparently trying to follow the trend where other countries are giving out subsidies for their own chip companies,” said Greg Roh, head of research at Hyundai Motor Securities.

In an effort to draw in chip equipment and fabless businesses, South Korea is developing a massive chip cluster in Yongin, south of the country’s capital Seoul, which is billed as the largest high-tech chipmaking complex in the world.

The government will reduce red tape and streamline bureaucracy, according to Finance Minister Choi, to assist accelerate the chip cluster’s construction at a rate twice as fast as usual.

Yoon announced in January that he would expand tax incentives on investments in the domestic semiconductor sector in an effort to increase employment and draw in more talent. Yoon has pledged to spend all available resources in the nation’s chip industry.

(Adapted from LiveMint.com)

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