South Korea Announces Record Trade Financing Package to Support Semiconductor Sector

South Korea Unveils Record Trade Financing Package to Support Semiconductor Sector

In response to an anticipated slowdown in its vital semiconductor sector, South Korea has announced its largest-ever trade financing package of 360 trillion won (£245 billion). The unprecedented measure, unveiled as part of the government’s 2025 Economic Policy Direction, aims to support exports and boost the economy.

With Asia’s fourth-largest economy bracing for tepid export growth of just 1.5% this year, down sharply from 8.2% in 2024, the government has earmarked 95 trillion won specifically to help Korean firms secure large-scale overseas orders through 2028. The semiconductor industry, which accounted for 20.8% of total exports in 2024, will receive particular attention.

To support chip makers, the government plans to increase investment tax credits and provide 14 trillion won in low-interest financing. Additionally, it will shoulder more than half the costs of infrastructure development in the planned Yongin-Pyeongtaek semiconductor cluster, set to become part of the world’s largest chip manufacturing hub.

To reduce dependence on major markets, Seoul is expanding its global logistics network by establishing new joint logistics centers in Eastern Europe and additional US locations. This move complements existing facilities in the Netherlands, Spain, Indonesia, and the US West Coast.

The comprehensive package also includes extended tax relief for small and medium-sized exporters, support for emerging sectors such as electric vehicles, and plans to significantly expand charging infrastructure by year-end. This intervention is aimed at protecting the country’s export-driven economy, which relies on overseas shipments for nearly 40% of its GDP.

South Korea is facing challenges following the aftermath of suspended president Yoon Suk Yeol’s short-lived declaration of martial law in the country on 3 December. The move sent shockwaves through financial markets, dampened business confidence, and hampered the nation’s diplomatic initiatives. The government’s trade financing package is seen as a crucial step in revitalizing the economy and ensuring stability in the semiconductor sector.
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