The South Korean government will provide the semiconductor industry generous state funds and incentives to facilitate 340 trillion won ($260 billion) investments committed by local chip companies with a vision of making the country a “chip superpower”.

Minister of Trade, Industry and Energy Lee Chang-yang on Thursday announced the government’s chip-sector growth road map with various incentive measures, including infrastructure support and tax advantages.

Under the plan, the government will provide funding for essential infrastructure, such as electricity and water supply, at Pyeongtaek and Yongin, the two cities that serve as hubs for expanding chip production led by top memory chip makers Samsung Electronics and SK hynix, while easing the floor area ratio regulation to 490 percent from 350 percent for the semiconductor complex, allowing for more factory space.

Tax credits for large companies investing in semiconductor facilities or R&D will be raised by 2 percentage points from the current 6 to 10 percent range. The tax credit will be granted for a wider range of activities, including design and verification technology of test equipment and intellectual property.

The government will also inject state funds to groom next-generation system semiconductors as the country’s new mainstay chip export item, with a goal to increase its market share to 10 percent from the current 3 percent by 2030. It will spend 950 billion won on feasibility studies on the development of power and auto chips by 2030 and 1.25 trillion won to help develop artificial intelligence chips by 2029.

It will also invest 1.5 trillion won to support local fabless companies in technology development, prototyping, and overseas expansion, the ministry added.

The government will work together with the private sector to train at least 150,000 people over 10 years to bolster the manpower in the semiconductor sector. Key experts recruited from overseas will receive a 50 percent break on their income taxes for 10 years, up from the current five years.

Minister Lee signed an MOU with SK hynix President Kwak Noh-jung, Samsung Electronics President Kyung Kye-hyun, and Dongjin Semichem President Lee Joon-hyuk to show their commitment to cooperation in human resources development through industry-academia collaboration.

To support the industry’s localization in semiconductor materials, parts and equipment, the government will create clusters in Pangyo and Yongin. The government’s initial goal is to achieve local sourcing for half of its materials, components and equipment in semiconductor manufacturing by 2030, up from the current 30 percent.

The government and the private sector will raise 300 billion won together from next year to promote innovation of semiconductor materials, parts and equipment companies, as well as mergers and acquisitions of chip design companies, the ministry said.

The Korean government’s latest bold support package for the country’s semiconductor industry underscores its commitment to make the country, already home to world’s top memory chip makers Samsung Electronics and SK hynix, “chip superpower” in the world amid intensifying competition among countries to take the leadership in the sector.

By Song Gwang-sup and Minu Kim

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