South Korea's cabinet approved a 31 trillion won (about $23 billion) support package for the country's semiconductor and battery industries this week, expanding tax credits and adding a low-interest loan facility for firms building new fabrication and cell plants at home.
The measures broaden an earlier programme and come as Seoul tries to keep pace with subsidy schemes in the United States, Japan and the European Union. According to the Ministry of Trade, Industry and Energy, the package raises the investment tax credit for large chipmakers and extends eligibility to more equipment and materials suppliers in the domestic supply chain.
Samsung Electronics and SK Hynix, which together account for the bulk of the world's memory-chip output, are the main beneficiaries. Both companies are expanding advanced-node and high-bandwidth-memory capacity to meet demand from artificial-intelligence accelerators, a segment where SK Hynix has led on HBM shipments.
Loans aimed at the supply chain
A new 17 trillion won loan facility, channelled through the state-run Korea Development Bank, will offer below-market financing for plant construction. The ministry said the facility is intended to reach smaller materials and parts makers that have struggled to fund expansion, not only the two memory giants.
Battery makers LG Energy Solution, Samsung SDI and SK On were also included. The package adds support for domestic production of cathode materials and for projects that reduce reliance on imported processed lithium and graphite, much of which is currently sourced from China. The trade ministry framed the battery provisions as a response to tighter content rules in overseas markets.
Part of a wider contest
The move follows Japan's continued funding of Rapidus and TSMC-linked projects, and a series of US incentives under its own chip programme. Trade Minister statements accompanying the announcement said the goal was to "secure manufacturing within the country" rather than see investment shift abroad in pursuit of foreign subsidies.
The package still requires the passage of related tax legislation in the National Assembly, where the governing and opposition parties have broadly supported chip incentives but differ on the scale of fiscal commitment. A vote is expected before the parliamentary recess.