S. Korea unveils W26tr support program for chip industry

May 24, 2024, 09:49 am

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President Yoon Suk-yeol speaks during an interagency meeting on economic issues at the presidential office on May 23, 2024. He unveiled a chip industry support package worth 26 trillion won (US$19 billion) and vowed to provide support. / Source: Yonhap

AsiaToday reporter Park Ji-eun

President Yoon Suk-yeol has unveiled a chip industry support program worth 26 trillion won (US$19 billion) on Thursday, saying, “Chips are people’s livelihoods, and everything that supports the chip industry is for the people.”

The plan was unveiled during an interagency meeting on economic issues, involving related ministries and regulators. “We have created a comprehensive support package worth 26 trillion won for the semiconductor industry,” Yoon said. The package includes financial programs, research and development (R&D) initiatives and infrastructure support for chip manufacturers, material suppliers and fabless companies specializing in chip design. Highlighting the chip industry as a pivotal field marked by intense global competition, Yoon stressed the critical importance of bolstering and supporting the nation’s chip industry.

Out of the total 26 trillion won, the government plans to allocate 17 trillion won for financial assistance aimed at aiding companies establish large-scale chip infrastructure. The 17 trillion won financial support program for the sector will be established at the state-run Korea Development Bank (KDB) to help prevent businesses from facing liquidity issues while investing in facilities. He vowed to extend an existing sunset tax credit provision for chip companies so that they do not experience difficulties in R&D and facilities investment as a semiconductor mega cluster project is currently under way in Gyeonggi Province. Saying “time is a subsidy,” Yoon promised to do his best to support the chipmakers, via the speedy construction of infrastructure including electricity, water supply and roads. The president also urged the government to talk with the National Assembly to promptly pass the Special Act on the National Power Grid in order to expedite the construction of transmission lines.

Responding to criticism that the government’s support plan for the chip industry mainly targets tax cuts for conglomerates and the rich, Yoon said, “Over 70 percent of the benefits from this comprehensive support program will be directed toward SMEs.” He also said, “If companies expand investment and earn more profits through tax support, the public will benefit from more quality jobs, thereby revitalizing the economy and increasing tax revenue.”

#chip #semiconductor #support program #Yoon Suk-yeol