South Korea aims to bolster local chip production with $19 billion of support

South Korea is the latest country to support its local semiconductor industry in a significant fashion. It's trying to stay competitive with the likes of the US, China and Taiwan with the help of a 26 trillion won ($19 billion) support package. The country will extend tax breaks that were set to expire at the end of this year and provide financial support to chipmakers through the state-run Korea Development Bank, as The Wall Street Journal reports.

Amid large demand for chips to power AI systems and other computing needs, South Korea saw exports of semiconductors rise 56 percent in April compared with a year earlier. That's despite fierce competition from the likes of Intel and Taiwan Semiconductor Manufacturing Co. (TMSC). SK Hynix said it would bolster its AI chip manufacturing capacity in South Korea with an extra $14.6 billion investment, while Samsung replaced the leader of its semiconductor division to try and become more competitive.

South Korea's moves could help it keep pace with the US, which has been trying to ramp up domestic chip production to reduce its reliance on imports. Through the CHIPS Act, the US is subsidizing manufacturers such as Intel, GlobalFoundreies and TMSC. As it happens, one of the largest recipients of a CHIPS Act subsidy is Samsung, which is receiving up to $6.4 billion in federal funding for a new semiconductor plant in Texas.