(May 23): South Korea has unveiled a 26 trillion won (US$19 billion or RM89.56 billion) package of incentives to bolster its chip sector, a boon to Samsung Electronics Co and SK Hynix Inc, as they race to stay ahead in an increasingly competitive industry.

The 26 trillion won programme includes 17 trillion won of financial support for certain investments as well as tax incentives, the presidential office said in a statement. The total is more than double the 10 trillion won Finance Minister Choi Sang-mok had proposed less than two weeks ago. Shares in Samsung and SK Hynix ended about 1% higher on Thursday.

The record programme follows calls to support the local chip industry, as governments from the US to China spend billions to attract and propel manufacturing projects by the likes of Taiwan Semiconductor Manufacturing Co and Intel Corp. That spending spree is accelerating, as Washington-Beijing tensions threaten to snarl the supply of components critical to most modern devices and the military. 

South Korea, the world’s biggest memory chip producer, has long preferred private conglomerates such as Samsung and SK to lead investment efforts. But the government is now playing a more active role, and has led plans to erect a mega-cluster of chip plants located outside of Seoul.

The latest package represents the Asian nation’s biggest single outlay of chip industry support yet. The government aims to finalise the details in June.