South Korea Boosts Chip Industry Aid to Navigate US Tariff Risks

Tuesday 15 April 2025 - 13:34

By: Zahouani Ilham

South Korea Boosts Chip Industry Aid to Navigate US Tariff Risks

South Korea has increased its semiconductor industry support package to 33 trillion won (approximately $23.25 billion), marking a 25% rise from the 26 trillion won announced last year. This move aims to bolster the nation's strategic chip sector amid growing uncertainties surrounding U.S. trade policies and heightened competition from Chinese manufacturers.

The expanded initiative includes raising the financial aid program for chipmakers to 20 trillion won, up from the previous 17 trillion won, according to a joint release by government ministries including the Ministry of Trade. The added support is intended to help domestic companies manage rising production costs and maintain a competitive edge in the global market.

South Korea, the fourth-largest economy in Asia, is home to major memory chip producers like Samsung Electronics and SK Hynix. However, these companies are trailing behind global competitors in chip design and contract manufacturing. In 2024, semiconductors accounted for 21% of South Korea’s total exports, reaching $141.9 billion. Shipments to China totaled $46.6 billion, while exports to the U.S. stood at $10.7 billion.

Amid signals that former U.S. President Donald Trump may soon announce new tariffs on imported semiconductors, South Korea’s Finance Minister Choi Sang-mok emphasized the importance of active dialogue with Washington to minimize negative effects on Korean industries. This includes ongoing U.S. Section 232 investigations into imports of semiconductors and biopharmaceuticals.

The announcement follows South Korea’s recent rollout of emergency measures to shield its automotive sector from potential U.S. tariffs. These measures included financial assistance, tax cuts, and subsidies to strengthen local demand and protect export-driven growth.