South Korea announces $10 billion in low-interest loans to semiconductor manufacturers

South Korea has unveiled a $10 billion package of low-interest loans to support its semiconductor industry, following similar moves by the Biden administration in the U.S. to aid its own semiconductor sector. The Ministry of Finance stated that this measure is a response to "unprecedented challenges," including the change in U.S. leadership and heightened competition from emerging markets like China.

The government emphasized that this initiative is part of a broader strategy to manage risks facing critical industries amid growing global uncertainties. According to the Ministry, the loans will be distributed through state-run banks, along with an additional $1.2 billion investment to strengthen the power grid infrastructure for new semiconductor complexes.

The government expressed concerns over potential reductions in incentives and shifts in the export environment due to the U.S. Inflation Reduction Act (IRA). These developments could impact industries such as automobiles, batteries, and steel, prompting South Korea to strengthen cooperation channels and mitigate risks for domestic companies.

South Korea's two largest chip manufacturers, Samsung and SK Hynix, are expected to benefit from these measures. SK Hynix, for instance, is investing in the Yongin cluster, a major chip manufacturing project slated for completion by March 2027. 

As the world's second-largest producer of semiconductors, after Taiwan, South Korea plays a key role in the global chip market. The Ministry of Finance also announced plans to accelerate the development of an AI innovation ecosystem, with a focus on AI computing infrastructure:

Concerted efforts will also be accelerated to establish an AI innovation ecosystem at an early stage by investing in AI computing infrastructure through the “National AI Computing Center Construction” project, with a total budget of 4 trillion won by 2030.”