$12.2 bil. in loans to be available at lowest rate for chipmakers beginning July

Deputy Prime Minister and Minister of Economy and Finance Choi Sang-mok speaks during a meeting of economy-related ministers at Goverment Complex Seoul, Wednesday. Yonhap

The government will offer $17 trillion won ($12.2 billion) in loans at the market’s lowest interest rates for chipmakers starting next month, the Ministry of Economy and Finance said Wednesday.

It also said tax incentives will be extended by another three years for eligible companies that develop “national strategic technologies,” including semiconductors, secondary batteries, displays, vaccines and hydrogen energy.

Announced Wednesday at a meeting of economy-related ministers, these measures come as part of a comprehensive support package mentioned by President Yoon Suk Yeol, May 23.

The package was worth 26 trillion won, with the main goal of boosting key industries amid heightened global competition.

The 17 trillion won will be available for both domestic and foreign chip manufacturers making new investments in Korea.

The eligible companies encompass chipmaking materials, parts and equipment as well as fabless manufacturing and plant construction.

For conglomerates, the loans will be offered at 0.8 percentage points to 1 percentage point lower than the market rate.

For small and medium-sized enterprises, the loans will be offered at 1.2 percentage points to 1.5 percentage points lower than the market rate.

In addition to the 17 trillion won, the government will help set up two funds totaling 1.1 trillion won.

Of the two funds, the smaller one will pool 300 billion won by 2025 and begin investing next month in chipmaking materials, parts and equipment.

The larger 800 billion fund will be created with a goal of “forming of a new business ecosystem in chip-funding.”

“The government will finalize detailed supportive measures and swiftly implement them in cooperation with ministries and institutions concerned so as to help our chipmakers continue to lead the industry globally,” said Choi Sang-mok, deputy prime minister and minister of economy and finance.

With regard to “national strategic technologies,” firms making facility investments have been eligible for tax incentives — 15 percent for conglomerates and 25 percent for SMEs.

For firms investing in R&D, tax incentives have been given at rates between 30 percent and 50 percent.

“Such tax incentives are set to expire by the end of this year, but the government will revise related policies and extend them by 2027,” the finance ministry said.

In order to nurture R&D projects in the chip industry, the government will invest 5 trillion won from 2025 to 2027. The amount will be up from 3 trillion won allotted for the 2022-2024 period.

A separate 2.5 trillion won will be spent on establishing infrastructure for the envisioned chips.

The government will also expedite due administrative procedures to halve the time needed for construction commencement, which is currently around seven years.