Korea Weighs Financing Options for $7.3 Billion Chip Program

South Korean government is preparing a program worth KRW10 trillion ($7.3 billion) to support local makers of chips and related components and materials. The latest reports claim that several financial options are being considered.

Finance Minister Choi Sang-mok visited makers of chip materials, parts, and equipment last week, which pressed for improved financing and tax support to facilitate investment and R&D in the industry. In a statement, he explained the government is considering turning to the state-owned Korea Development Bank or creating a joint public-private fund for financing the chip support project.

Choi, who also is Deputy Prime Minister, committed to working with the government to extend a sunset clause covering investment tax credits for strategic technologies due to end in 2024, while expanding the scope of R&D investment tax credits. Ongoing large-scale projects related to advanced packaging and mini-fabs will soon undergo feasibility studies, he added.

In January, local media reported Samsung and SK Hynix planned to invest KRW622 trillion to expand chip production capacity in a 21-million-square-metre mega cluster, with 16 new fabrication facilities targeted by 2047. The country has faced growing pressure to limit exports of advanced chips and machinery to the mainland, with its government pushing the US to reconsider new restrictions to allow local companies to move ahead with plans to expand operations in China.