South Korea too has announced a record support package of 33 trillion won (US$23 billion). With this investment, the United States is seeking to bolster its own semiconductor industry. The move comes amid the uncertainty surrounding possible tariffs on imported US semiconductors. U.S. President Donald Trump is expected to announce the final tariff rate in the coming days. This surprising decision has sent alphabet soup shivers through South Korean manufacturers.
The new package dwarfs last year’s pledge of 26 trillion won. This is indicative of the South Korean government’s proactive approach to defending an industry critical to its economic future. In 2024, South Korea’s semiconductor exports piped up to a remarkable $141.9 billion. That number was a little more than 20% of the country’s total exports, $683.6 billion.
The U.S. Department of Commerce has launched an investigation into the entire electronics supply chain, citing national security concerns regarding semiconductor imports and manufacturing equipment. This probe only increases the confusion for South Korean firms. Perhaps the outcome could have wider implications, given that the U.S. is their second-biggest export destination.
Just last month, in fact, Trump exempted semiconductors from his super steep “reciprocal” tariffs. The upcoming tariff announcement is nonetheless sowing fear within the quarterly tariff announcement. South Korea’s exports to the U.S. hit a new all-time high in 2024, marking the seventh consecutive year of record annual totals. They soared 10.5% over the previous year, to $127.8 billion.
The South Korean government’s new funding initiative includes subsidies for building underground, more resilient power transmission lines to semiconductor clusters. Next generation SDF provision The funding ratio for social infrastructure in advanced industrial complexes will increase from 30% to 50%. This raise is meant to strengthen the competitive operational upper hand of homegrown chipmakers including Samsung Electronics and SK Hynix.
“to determine the effects on national security of imports of semiconductors, semiconductor manufacturing equipment, and their derivative products” – U.S. Department of Commerce
As South Korea has wrestled with many of these issues, the semiconductor industry will still continue to be an important part of its economic plan. This government has shown itself to be committed to supporting this nascent sector. This commitment underscores its essential function of fueling downstream economic growth and keeping us competitive in the international economy.