South Korea plans to bolster its fiscal support for domestic chipmakers next year, shoring up an industry that may face unfavourable policies from the incoming Trump administration and more intense challenges from Chinese rivals.
Financial support including loans from state-affiliated banks is set to amount to 14.3 trillion won ($13.8 billion) next year in an elevation of continued policy stimulus, the Finance Ministry said Wednesday.
Separately, the government plans to cover “a significant share” of the 1.8 trillion won needed to bury power cables underground in chipmaking clusters south of Seoul, it said in a statement.
South Korea had already kicked off an 26 trillion won aid package in July, part of which will be reflected in next year’s support amount.
South Korea is stepping up its support for the crown jewel of its economy at a time when President-elect Donald Trump vows to bolster US manufacturing and reduce reliance on foreign supply chains. While the nation has continued to funnel fiscal support into chipmakers, Trump’s election has added urgency to safeguarding the growth of the industry.
In its statement the ministry said there is potential for economic uncertainties to grow after the new US administration is inaugurated, even though US-South Korean ties in defense and shipbuilding could still benefit.
See also: Nvidia forecast fails to meet loftiest estimates for AI star
South Korea’s biggest company, Samsung Electronics, in particular is building a semiconductor factory in Texas with subsidies promised under the Biden administration’s Chips Act. Trump’s camp repeatedly criticised that funding program during the election campaign.
China may also ratchet up its pursuit of South Korea in supply chains, raising the need for Seoul to help shore up the competitiveness of its tech industries, the Finance Ministry said. A rising wave of protectionist polices may also dent South Korea’s trade-reliant economy, it said.
See also: Applied Materials forecast spurs concern about chip spending
Technology exports account for roughly a third of South Korea’s shipments abroad. The economy is expected to be on course to grow at least 2% this year compared with 2023, particularly on the back of strong demand for semiconductors, including memory chips used in artificial intelligence development.
Forecasts among economists for next year are turning less optimistic after the export rally has softened in recent months. Officials also worry Trump could get tougher on US trading partners after he assumes office in January.
Chart: Bloomberg
