Strengthening Competitiveness... Establishing a 300 Billion Won 'Semiconductor Ecosystem Fund'

Establishment of 'Preferred Funding Supply' Process for Core Excellent Companies

A 'Semiconductor Ecosystem Fund' worth 300 billion KRW will be established to strengthen the competitiveness of the domestic semiconductor industry.

On the 26th, the Financial Services Commission announced that it held the 'Semiconductor Ecosystem Fund Formation Agreement Ceremony' at the YMCA Hall in Jung-gu, Seoul. The ceremony was attended by Kim So-young, Vice Chairman of the Financial Services Commission, Jang Young-jin, 1st Vice Minister of the Ministry of Trade, Industry and Energy, and representatives from agreement institutions such as Samsung Electronics and SK Hynix.

The Semiconductor Ecosystem Fund is a financial support measure worth a total of 300 billion KRW, aimed at expanding the domestic semiconductor value chain, which is centered on memory, to system semiconductors and materials, parts, and equipment (SoBuJang). The fund will be jointly invested with 75 billion KRW from the semiconductor industry (Samsung Electronics and SK Hynix), 75 billion KRW from policy financial institutions (Korea Development Bank, Industrial Bank of Korea, Korea Growth Finance), and 150 billion KRW from private investors.

[Image source=Yonhap News]

The authorities plan to focus support through the Semiconductor Ecosystem Fund on investments in semiconductor SoBuJang or fabless companies with technological competitiveness, supply of funds for mergers and acquisitions (M&A) to advance technology and expand sales markets, and protection of domestic technology. Accordingly, sub-funds will be established, including the 'SoBuJang Blind Fund (120 billion KRW)' which invests in the overall growth and technological independence of the semiconductor SoBuJang ecosystem, and the 'SoBuJang-Fabless Project Fund (180 billion KRW)' for M&A and securing technology of core SoBuJang and fabless companies.

Vice Chairman Kim said, "To respond to the competition among major countries for global semiconductor industry supremacy and supply chain regulations, our semiconductor industry needs to strengthen comprehensive competitiveness not only in memory semiconductors but also in system semiconductors and SoBuJang." He added, "Please actively support domestic fabless and semiconductor SoBuJang companies with growth potential to expand their capital and technological capabilities and acquire global competitiveness."

Meanwhile, at the 3rd Policy Financial Support Council held immediately after, the supply performance of funds in the previously selected five key focus areas was reviewed, and ways to establish preferential funding processes for core excellent companies were intensively discussed.

According to the Financial Services Commission, policy financial institutions (KDB, IBK, Korea Credit Guarantee Fund) supplied a total of 46.3 trillion KRW, which is 50.5% of the annual target, to the five key strategic areas by May. This exceeded the target execution rate of 41.7%.

Additionally, through the council, the authorities decided to prepare a checklist to select 'core excellent companies' by industry for focused support. Companies meeting the checklist criteria will undergo expedited credit reviews and operate a process that offers preferential funding conditions.

Accordingly, after inter-ministerial consultations, checklists have been prepared for a total of 11 industries, and there are plans to consider expanding the industries and sectors subject to the checklist when establishing the 2024 policy financial supply direction.

Vice Chairman Kim stated, "In a situation where corporate demand for funds is shrinking due to recent high interest rates and global economic slowdown, policy financial institutions have prioritized preferential funds in national strategic sectors to drive corporate economic activities." He added, "Going forward, policy financial institutions should continue to support excellent companies at the forefront in response to urgent industrial issues such as export competitiveness recovery and securing a technological gap in advanced industries."

This content was produced with the assistance of AI translation services.