South Korea boosts chip industry funding to $23bn in response to global tariff risks

South Korea has expanded chip sector assistance following US trade measures. (Photo: IM Imagery/Shutterstock)

The South Korean government has introduced a support programme valued at KRW33 trillion ($23.25bn) aimed at reinforcing its semiconductor industry. The move comes amid increasing global trade tensions and possible tariff actions from the US targeting chip imports, reported Reuters.

A revised scheme will provide KRW20 trillion ($14bn) in financial assistance, an increase from a previously announced KRW17 trillion ($12bn), to support domestic manufacturers such as Samsung Electronics and SK hynix. The measures will fund infrastructure development, low-interest loans, and workforce expansion. The Ministry of Economy and Finance confirmed that KRW4 trillion ($2.8bn) from this package would be deployed by the end of 2026.

The initiative was unveiled after the US Department of Commerce launched a Section 232 investigation into semiconductor imports, citing national security concerns, according to a report in POLITICO. The inquiry could lead to new tariffs of at least 25%, with provisions to escalate the rate over time. These potential levies are part of the broader trade strategy under the current US administration, which has prioritised domestic chip production and expressed concern over East Asian supply chain dependencies.

“We will actively respond to the situation by mobilising all available policy tools and closely consulting with the US government,” said South Korea’s Finance Minister Choi Sang-mok. He added that the support package reflects the government’s intention to maintain competitiveness in global chip supply chains.

Semiconductors remain a major export driver for South Korea

Semiconductors continue to represent a significant portion of South Korea’s export portfolio. In 2024, chip exports totalled $141.9bn, accounting for 21% of the country’s total exports. The leading markets included China, which received $46.6bn worth of chips, followed by the US with $10.7bn.

The announcement also aligns with South Korea’s recent policy direction to provide targeted support for key sectors exposed to external shocks. In March, the government launched emergency measures for the automotive industry, including tax relief and initiatives to stimulate domestic consumption.

The chip package also coincides with growing pressure on global semiconductor supply chains due to geopolitical realignments and industrial policy shifts. The US CHIPS and Science Act, which allocates over $50bn to boost domestic production, and similar initiatives in the EU and Japan, have prompted South Korea to accelerate its own sectoral support.

The latest measures form part of a broader push to position the country as a stable source of advanced semiconductor manufacturing amid increasing efforts by governments to secure localised chip production. The support also comes as South Korea prepares to host key industry events and initiate new public-private partnerships targeting research and workforce development.

The government has not confirmed whether additional stimulus or policy revisions are under consideration, but officials indicated that further announcements could follow depending on the outcome of US trade actions. The Ministry of Trade, Industry and Energy is expected to lead discussions with international counterparts in the coming weeks.

The semiconductor initiative is expected to be reviewed periodically as part of South Korea’s ongoing industrial strategy, with the potential for adjustments based on market conditions and foreign policy developments.

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