South Korea will begin providing financial aid to chipmakers in July, launching a 26 trillion won ($19 billion) support package to bolster the critical semiconductor industry. The initial phase will include an 18 trillion won package, offering preferential loans and investment capital. Next month, eligible companies can access a 17 trillion-won loan program at the lowest market interest rates. Additionally, the government will help establish two funds totalling 1.1 trillion won to invest in local chipmaking equipment and materials by 2025.

The following initiative aligns South Korea with other nations like the US and China, which are investing heavily in the semiconductor sector amid growing geopolitical tensions and fragmented global supply chains. With Samsung Electronics and SK Hynix leading the way, South Korea remains the world's largest producer of memory chips. The government is also investing$470 billion to develop a semiconductor 'mega cluster' near Seoul, which will become the core of its chip industry.

The aid package comes as the US urges its allies to limit China's access to advanced semiconductor technology. Reports suggest that American officials want South Korea to restrict the export of equipment and technologies needed for high-end chip production to China. The South Korean government plans to extend tax incentives for eligible firms by three years to support the industry further. It is considering expanding these benefits to include chip materials, parts, and equipment manufacturers.