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South Korea to start chipmaker aid program in July with $25B package

South Korea will begin awarding aid to chipmakers from July, kicking off a 26 trillion won (S$25 billion) package of financial support pledged towards boosting a critical industry.

Seoul will begin with an 18 trillion won package of measures including preferential loans and investment capital. Starting next month, eligible firms can tap a 17 trillion won loan programme at the market’s lowest interest rates, the finance ministry said on Wednesday (Jun 26). The government will also help set up two funds totalling 1.1 trillion won, the smaller of which will pool 300 billion won by 2025 and begin investing in local makers of chipmaking gear and materials next month.

South Korea joins countries from the United States to China that are funnelling government aid into a strategic arena, particularly as geopolitical tensions fragment the global chip supply chain. Samsung Electronics and SK Hynix technology help make South Korea the world’s biggest maker of memory chips. The government is now investing US$470 billion to build a semiconductor “mega cluster” outside of Seoul that will serve as the heart of its chip industry.

Seoul’s package of aid move comes as the US presses allies to curb China’s access to semiconductor technology. American officials want South Korea to restrict the flow of equipment and technologies for making high-end logic and memory chips to China, Bloomberg News has reported.

To support the overall plan, the government will extend tax incentives to eligible firms by another three years. It’s also considering expanding the scope of beneficiaries to include makers of chip materials, parts and equipment. Bloomberg

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