South Korea has announced a 33 trillion won (US$23.25 billion) support package for its semiconductor industry, a 25% increase from last year’s 26 trillion won (US$18,31 billion) package.

The funding aims to address uncertainties in US trade policies and growing competition from Chinese chipmakers.

Financial assistance for the sector will rise to 20 trillion won (US$14.08 billion), up from 17 trillion won (US$11.97 billion), according to a joint statement from several ministries.

The announcement comes as US President Donald Trump plans to disclose new tariff rates on imported semiconductors.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ South Korea’s semiconductor support follows decades-long industrial policy tradition

South Korea’s latest $23 billion semiconductor package continues a strategic approach that transformed the country from an agrarian economy (per capita GDP of just $82 in 1961) to a technology powerhouse 1.

This investment follows the same blueprint Korea used during its initial industrialization, when the government prioritized technology transfer and domestic capacity building over foreign direct investment.

By the 1980s, Korea shifted toward building indigenous R&D capabilities, launching the National R&D Program in 1982 and increasing R&D investment from $526 million (0.81% of GDP) in 1981 to $26.3 billion (2.9% of GDP) by 2005 1.

Samsung’s rise exemplifies this approach, entering semiconductors in the late 1970s through strategic acquisition and becoming the world’s largest memory chip producer by 1993 through consistent government backing and private investment 2.

The new support package aims to address Korea’s current challenges in chip design and contract manufacturing, areas where Korean firms have fallen behind despite their memory chip dominance.

2️⃣ Global semiconductor market enters new era of government intervention

South Korea’s increased support comes amid significant government intervention in the semiconductor industry worldwide, creating a new competitive landscape.

The global semiconductor market is projected to reach $697 billion in 2025, up from $627 billion in 2024, with generative AI chips alone expected to exceed $150 billion in sales 3.

However, this growth is happening alongside rising trade barriers, as evidenced by the Trump administration’s investigations into semiconductor imports under national security grounds 4.