South Korea announced a $19 billion stimulus plan to boost the domestic chip industry.
Zhitong Finance learned that the South Korean President's Office issued a statement on May 23 announcing a package of incentives worth 26 trillion won (about 19 billion US dollars) to promote the development of its chip industry. The plan includes financial support of 17 trillion won and tax benefits for certain investments. This is good news for Samsung Electronics (SSNLF.US) and SK Hynix, two companies that are trying to stay ahead in an increasingly competitive industry.
After the news was announced, Samsung's stock price reversed an earlier decline and rose 1.4% in the Seoul stock market. After Nvidia (NVDA.US) announced impressive results, other semiconductor stocks in Asia rose one after another. After the news broke, SK Hynix's stock price continued to rise in early trading, rising about 3%.
As the US government spent billions of dollars to attract and promote manufacturing projects from companies such as TSM.US and Intel (INTC.US), calls to support the local chip industry set a record. The global spending boom is accelerating as geopolitical tensions threaten the global supply of most modern equipment and parts critical to the military.
As the world's largest producer of memory chips, South Korea has long been inclined to let private enterprise groups such as Samsung and SK take the lead in investing. But the South Korean government is now playing a more active role and is leading the way in developing plans to establish a large-scale chip factory cluster outside of Seoul.