South Korea invests nearly 70 billion USD to support semiconductor and artificial intelligence industries

The South Korean government will support advanced strategic industries such as semiconductors, artificial intelligence (AI) and batteries, which have been hit by the trade war initiated by US President Donald Trump, with 100 trillion won ($69.3 billion).

The plan includes setting up a 50 trillion won ($34.6 billion) fund at the Korea Development Bank (KDB) and raising another 50 trillion won from commercial banks, for a total of 100 trillion won. In addition to advanced industries, the South Korean government has also decided to include industries essential to economic security, such as automobiles and steel, in the list of supported sectors.

Acting President and Deputy Prime Minister for Economy and Finance, Choi Sang-mok.

At the meeting of ministers on economic situation and industrial competitiveness enhancement held on March 5, the Korean government announced the "Plan to establish the Advanced Strategic Industry Fund to Enhance Future Industrial Competitiveness" based on these contents.

"Uncertainties in the trade environment are constantly increasing and technological competition among major countries is intensifying, focusing on advanced technologies such as semiconductors, AI and electric vehicles," said Acting President and Deputy Prime Minister for Economy and Finance Choi Sang-mok.

Mr. Choi called for "actively using the advanced strategic industry fund to enhance technological competitiveness and respond to the rapidly changing trade environment."

Initially, the Korean government will create a strategic advanced industry fund with a maximum size of 50 trillion won at KDB over five years. This amount includes 37 trillion won from newly injected capital and part of a low-interest loan program for the semiconductor industry, which is scheduled to be implemented from this year for three years, covering the 2026-2027 period (12.75 trillion won).

In addition, private financial institutions such as commercial banks will also participate. Commercial banks will contribute an additional 50 trillion won to the 50 trillion won fund. KDB is expected to participate in a subsidiary role to ease the burden on banks. Normally, banks apply a risk-weighted asset (RWA) ratio of 250-400% when investing, but this time the ratio is reduced to 100% to ease the burden on capital stability.

South Korea's advanced strategic industries such as semiconductors, artificial intelligence (AI) and batteries are struggling due to the trade war initiated by US President Donald Trump.

The 100 trillion won fund will be focused on supporting strategic advanced industries such as semiconductors, secondary batteries, displays, biotechnology, defense and robotics. The government has also added vaccines, hydrogen, mobility and future transportation, and AI - national strategic technology sectors under the Special Tax Restriction Act - to the support list.

Support methods are also being diversified. The Korean government has decided to provide equity investment to small and medium-sized enterprises that have difficulty in borrowing from the market or receiving low-interest loans. Indirect investment through funds and joint ventures with supported companies are also being considered. For ultra-long-term infrastructure projects, the fund will participate in a supporting role to attract high-level private investment.

In addition to semiconductors, funds needed for infrastructure investment and research and development (R&D) in other advanced industries will be provided at interest rates as low as government bonds. The government also plans to provide support in the form of a package through the fund in global order competitions.

The fund will be funded by issuing government-guaranteed strategic advanced industry fund bonds. Operating costs such as interest charges and other expenses will be borne by KDB itself. Government-guaranteed bonds will be issued sequentially within the annual guarantee consensus limit approved by the National Assembly, depending on capital needs and bond market conditions, which is expected to be around 10 trillion won per year.

Source: https://www.baogiaothong.vn/han-quoc-dau-tu-gan-70-ty-usd-ho-tro-nganh-ban-dan-tri-tue-nhan-tao-192250307174121011.htm