The South Korean government announced a $26 billion investment to support the semiconductor industry

Seoul - South Korean President Yoon Seok-yoon announced a record 26 trillion won (nearly S $26 billion) plan to support the country's semiconductor industry.

South Korea's presidential Blue House said in a statement Thursday that the government has developed a comprehensive support plan for the semiconductor industry, including finance, infrastructure, research and development, and support for small and medium-sized enterprises.

The package includes 17 trillion won worth of financial support through the state-run Korea Development Bank to support large-scale investments in semiconductor companies, as well as a US $7 billion (about S $9.5 billion) chip investment and research support program announced earlier this month.

Yoon said South Korea will also expand tax incentives for chip investment, hoping to increase job opportunities in the industry and attract more talent.

Building large-scale chip manufacturing clusters creates millions of jobs

South Korea is also building a massive chip manufacturing cluster in Yongin, 40km south of Seoul, which it claims is the world's largest semiconductor manufacturing complex and will create millions of jobs.

At a meeting with senior government officials, Yin Xiyue pointed out that the global semiconductor market is in an "all-out war" and "the winner depends on who is the first to manufacture the most advanced semiconductor with high information processing capacity." The state must provide support for the semiconductor industry so that it does not fall behind its competitors."

South Korea is home to global chipmaking giants Samsung Electronics and SK Hynix, but lags behind some competitors in areas such as chip design and contract chip manufacturing. South Korea's share of the global fabless market, which is dominated by U.S. chip giant Nvidia, is about 1 percent, the Blue House said, still leaving a gap with major contract chipmakers such as TSMC.

Set up a fund to support fabless

Yoon said a 1 trillion won fund will be set up to support fabless companies and small and medium-sized enterprises linked to the industry.

The government aims to increase South Korea's share of the global nonmemory chip market to 10% from the current 2%, said Undergun, South Korea's minister of Trade, industry and Resources.

"South Korea supplies 80 percent of the world's memory semiconductors and has said it will invest 300 trillion won in Yongin Cluster, but there is a water supply problem there," said Kim Dae-jong, a professor of business administration at Sejong University. In addition to addressing these issues, today's announcement appears to be aimed at supporting innovative smes to further enhance their competitiveness against rivals such as Taiwan."

Semiconductors, South Korea's top export, hit a nearly two-year high of $11.7 billion in March, accounting for a fifth of the country's total exports. Cho Dong-geun, an honorary professor of economics at Myongji University, said semiconductors have become the only reliable source of growth for South Korea.