President Yoon Announces "26 Trillion Won Comprehensive Support for Semiconductor Industry"…No Direct Subsidy Payments Planned

Presided over the '2nd Economic Issue Review Meeting' on the 23rd
Ordered groundbreaking measures to strengthen system semiconductors

[Image source=Yonhap News]

On the morning of the 23rd, President Yoon Suk-yeol presided over the '2nd Economic Issue Review Meeting' at the Presidential Office in Yongsan, Seoul, focusing on the semiconductor industry. He announced, "We have created a comprehensive semiconductor industry support program worth 26 trillion won, covering not only finance, infrastructure, and research and development (R&D) but also support for small and medium-sized enterprises (SMEs) and mid-sized companies."

At the meeting, President Yoon stated, "As everyone knows, semiconductors are a field where a national total war is underway, and the outcome depends on who can produce the most advanced semiconductors with high-level information processing capabilities first." He added, "The government must firmly back semiconductor support that is not inferior to competing countries." The meeting was convened to discuss the comprehensive semiconductor industry support program, current issues related to the semiconductor mega cluster, and plans to foster the system semiconductor industry.

First, 17 trillion won will be invested in large-scale facility investments through the establishment of a 'Semiconductor Financial Support Program.' President Yoon said, "We will establish a semiconductor financial support program worth 17 trillion won at KDB Industrial Bank," adding, "Since companies invest huge funds in facilities such as new factory construction and line expansion, liquidity problems arise, but these difficulties will be largely alleviated through the Industrial Bank's support program."

President Yoon particularly instructed the Ministry of Trade, Industry and Energy to prepare groundbreaking measures to strengthen system semiconductor capabilities, which will determine the future success of the semiconductor industry. However, after in-depth consideration of directly providing subsidies to semiconductor companies, the government decided not to offer direct support.

Yoon: "Electricity, Water, and Road Infrastructure to be Developed Rapidly"

In his opening remarks, President Yoon promised, "The government and public sector will take responsibility for rapidly developing infrastructure such as electricity, water, and roads to ensure there are no setbacks in establishing the semiconductor cluster." He also emphasized, "We will create a 1 trillion won 'Semiconductor Ecosystem Fund' to support promising fabless (semiconductor design specialists) and SoBuJang (materials, parts, and equipment) companies to grow into global enterprises," and added, "Research infrastructure that can be jointly used, such as minifabs (research facilities equipped with 300mm wafer processing equipment for demonstrating semiconductor materials, parts, and equipment), will be swiftly expanded to the level desired by companies."

On the afternoon of the 9th, the 1st Economic Issue Review Meeting, chaired by President Yoon Seok-yeol, was held at the Presidential Office building in Yongsan, Seoul. [Image source=Yonhap News]

Regarding claims from some quarters that support for the semiconductor industry equates to 'tax cuts for large corporations,' President Yoon explained, "When tax incentives lead to increased corporate investment and profits, the public benefits from more quality jobs, revitalizing livelihoods and increasing tax revenues. Therefore, 'semiconductors are directly linked to people's livelihoods.'" He further clarified, "More than 70% of this comprehensive semiconductor industry support program will benefit small and medium-sized enterprises and mid-sized companies."

President Yoon also ordered active measures to foster the system semiconductor sector, which still holds a negligible share of the global market compared to memory semiconductors. He stated, "The future success of the semiconductor industry will be decided by system semiconductors, which account for two-thirds of the total market. However, our fabless industry's market share remains at about 1%, and the gap with leading companies in foundry (semiconductor contract manufacturing) persists." He urged the Ministry of Trade, Industry and Energy to implement extraordinary measures to strengthen system semiconductor competitiveness.

Direct Subsidies Excluded, Unlike the US and Japan

Meanwhile, although the government had considered providing direct subsidies through fiscal measures to foster the semiconductor industry, it decided against direct support at this meeting. A senior official from the Presidential Office explained to Asia Economy, "Countries with semiconductor factories are South Korea and Taiwan, but they do not provide direct subsidies. The US and Japan, which are trying to attract semiconductor factories, are the ones offering large-scale subsidies," clarifying the difference.