South Korea to provide $10 billion in low-interest loans to support chip sector by 2025

         South Korea announced plans to offer 14.3 trillion won ($10.25 billion) in low-interest loans to its semiconductor sector by 2025, utilizing direct loans, insurance, and guarantees from government-affiliated institutions to boost its competitiveness in the global chip market. The initiative aims to strengthen infrastructure and accelerate the development of the Yongin-Pyeongtaek chip cluster, positioned as the world’s largest high-tech semiconductor manufacturing hub.

The government will cover a significant portion of the 1.8 trillion won required for underground cable installation in the southern Seoul manufacturing cluster, designed to attract semiconductor equipment and fabless companies.

South Korea is mobilizing all available resources to counter China’s rapid semiconductor advancements and navigate uncertainties surrounding global trade policies, including those of a second-term Donald Trump administration in the United States. Concerns center around potential changes to the Inflation Reduction Act and CHIPS Act, broader tariffs, and reduced incentives for U.S.-based investments.

Part of South Korea’s broader 26 trillion won aid program, launched in July, will carry over into the 2025 support package. Additionally, the government plans to raise the tax credit rate for semiconductor companies by 10 percentage points and invest 4 trillion won by 2030 in a national artificial intelligence computing center.

South Korea forecasts its economy will grow by at least 2% in 2024, supported by robust semiconductor demand, particularly for memory chips used in artificial intelligence development.