South Korea’s Ministry of Trade, Industry and Energy announced on Monday the establishment of a fund valued at 300 billion won (approximately $229.25 million) to strengthen the chip industry’s value chain, enhance the chip sector, and support materials, parts, and components companies.
During the ‘3rd Policy Finance Support Council and Semiconductor Ecosystem Fund Establishment Agreement Ceremony’ held at Seoul, on June 26, Kim So-young, Vice Chairman of the Financial Services Commission, explained the purpose and objectives of the Semiconductor Ecosystem Fund.
The fund aims to actively assist domestic fabless and semiconductor sub-sector companies with significant growth potential, helping them enhance their financial resources and technological capabilities to achieve global competitiveness.
The Semiconductor Ecosystem Fund aims to secure KRW 300 billion in funding, including KRW 75 billion from semiconductor giants such as Samsung Electronics and Hynix, KRW 75 billion from policy financing provided by growth finance institutions, industrial banks, and corporate banks, and an additional KRW 150 billion from private investors.
The fund is structured into two sub-funds: the Small Business Blind Fund, with a budget of KRW 120 billion, and the Small Business and Fabless Project Fund, which has KRW 180 billion allocated. The Small Business Blind Fund will primarily focus on investing in the overall growth and technological self-reliance of the semiconductor small business ecosystem. The Small Business and Fabless Project Fund will support the development of small businesses and fabless projects in the industry.
Many companies face challenges securing funds, particularly during the current industry downturn and recent interest rate hikes. The fund’s primary focus is to support fabless companies and manufacturers of materials, components, and equipment within the chip industry, aiming to strengthen the overall ecosystem.
“To prioritize funding effectively, we will enhance the support process for key companies and allocate preferential funds to exceptional companies requiring nurturing in each industry,” Kim So-young stated
Kim further pledged financial support to enhance the competitiveness of high-tech industries. Recognizing the shortfall compared to the funding provided by leading countries such as the United States under the Chips Act, the Financial Services Commission intends to devise a plan to allocate additional financial resources.
Under the U.S. Chips Act, which came into effect last August following its signing by U.S. President Joe Biden, tens of billions of dollars in incentives are offered to chip manufacturers for constructing new fabrication facilities within the United States. South Korean companies face the need to actively participate in the U.S.-led restructuring of supply chains.
Kim added, “We will enhance the terms and conditions governing export bills of exchange and import letters of credit, which are crucial for exporters. We will provide assistance for investments diversifying export destinations to address geopolitical risks like trade conflicts between major nations. Moreover, we will actively meet the demand for research and development and new facilities for promising products to bolster medium and long-term export competitiveness.”