South Korea increases support for strategic industries to 33 trillion won to mitigate risks posed by the US-China trade war.

Taiwan • Business • 04/15 02:22
South Korea increases support for strategic industries to 33 trillion won to mitigate risks posed by the US-China trade war.

On April 15, 2025, the South Korean government announced that in response to potential U.S. tariff policies and competitive pressures from China, it will provide an additional 7 trillion won (approximately 4.9 billion USD) to support strategic industries like semiconductors, bringing the total aid to 33 trillion won (approximately 23.1 billion USD). The plan includes infrastructure development, low-interest loans, talent development, and international cooperation, focusing on the semiconductor, display panel, battery, and biotech sectors, with the aim of strengthening South Korea's position in the global high-tech supply chain.

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South Korea increases support for strategic industries to 33 trillion won to mitigate risks posed by the US-China trade war.

On April 15, 2025, the South Korean government announced that in response to potential U.S. tariff policies and competitive pressures from China, it will provide an additional 7 trillion won (approximately 4.9 billion USD) to support strategic industries like semiconductors, bringing the total aid to 33 trillion won (approximately 23.1 billion USD). The plan includes infrastructure development, low-interest loans, talent development, and international cooperation, focusing on the semiconductor, display panel, battery, and biotech sectors, with the aim of strengthening South Korea's position in the global high-tech supply chain.

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Government Expands Support Scale to 33 Trillion Korean Won

On April 15, South Korea's Ministry of Finance and Ministry of Trade, Industry and Energy, among other departments, jointly announced that the industry support plan, originally set at 26 trillion Korean won, will be expanded to 33 trillion won, an increase of 27%. The additional 7 trillion won budget will primarily target medium-sized enterprises in the semiconductor and other strategic industries, providing funds for infrastructure construction and financial assistance.

The semiconductor industry will receive an additional 3 trillion won in low-interest loans, bringing the total support scale for the industry to over 20 trillion won by 2027. This funding will be used to expand production capacity, upgrade process technology, and strengthen supply chain resilience.

Responding to US-China Trade Pressure: Government Takes Initiative

The South Korean government's move is mainly in response to the possibility of President Trump imposing a 25% tariff on imported semiconductor products. Although the policy has been delayed for 90 days, South Korean Finance Minister Choi Sang-mok emphasized that this grace period is a "crucial window" for the government to enhance the competitiveness of domestic companies.

Additionally, competition from China in terms of technology and pricing is becoming increasingly intense, especially in the fields of chip design and wafer foundry. While South Korean companies like Samsung Electronics and SK Hynix lead in the memory chip sector, they still face challenges in the non-memory sector.

Infrastructure Construction and Semiconductor Cluster Development

Infrastructure construction is a key focus of the additional budget. The government plans to invest 1.2 trillion won in the construction of underground transmission lines for semiconductor clusters, with six lines in Yongin and Pyeongtaek expected to be completed by 2038. The 2025 supplementary budget has already allocated 6.26 billion won specifically for this project.

This infrastructure will support the semiconductor clusters being developed in South Korea, promoting collaboration and innovation among companies and enhancing the efficiency and stability of the overall industrial ecosystem.

Focusing on Strategic Industries: Chips, Panels, Batteries, and Biotech

In addition to semiconductors, the South Korean government will also allocate funds to other strategic industries, including panels, batteries, and biotech. These industries are considered key drivers of future economic growth, and the government aims to assist medium-sized enterprises in expanding their R&D and production scale through financial support and policy guidance.

According to official data, South Korea's semiconductor exports in 2024 reached $141.9 billion, accounting for 21% of the nation's total exports. Exports to China amounted to $46.6 billion, and to the US, $10.7 billion, indicating the industry's high dependence on foreign trade and its susceptibility to changes in international trade policies.

Talent Development and International Cooperation

To strengthen the long-term competitiveness of the industry, the South Korean government will also invest resources in talent development and international cooperation. The plan emphasizes attracting overseas researchers to participate in local projects and expanding cooperation with international institutions.

The government plans to establish AI and semiconductor-related colleges at universities to cultivate master's and doctoral-level professionals, providing research funding and industry-academic collaboration platforms to promote technological innovation and knowledge transfer.

Supplementary Budget and Legislative Process

The additional 7 trillion won support plan is part of the South Korean government's proposed 12 trillion won supplementary budget, which still requires parliamentary approval. The overall supplementary budget includes expenditures for disaster response and other economic challenges, in addition to industrial support.

The South Korean government stated that it will continue to negotiate with the US on tariff issues related to semiconductor and biotech products and will assist domestic companies in maintaining a competitive edge during the global supply chain restructuring through active fiscal policies.

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