South Korea’s investment plan comes amid increasing competition China and potential policy shifts under the new US administration. Credit: Sushitsky Sergey / Shutterstock.

South Korea is planning to provide Won14tn ($10bn) in low-interest loans to bolster its semiconductor industry in the coming year, reported Reuters, citing the country’s finance ministry.

The move comes amid increasing competition from China and uncertainties surrounding the policy shift of the upcoming second term of US President-elect Donald Trump.

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Planned to be distributed through state-run banks, the loans will include Won1.8tn earmarked for power transmission infrastructure to aid companies at a new chip complex.

South Korea is constructing what it expects to be the world’s largest high-tech chipmaking cluster in Yongin and Pyeongtaek, south of Seoul.

The complex is expected to attract chip equipment and fabless companies.

The ministry was quoted by Reuters as saying in a statement: “In response, the government plans to mobilise all available resources and actively support companies in overcoming the industry’s crisis and achieving a renewed leap forward.”

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According to the ministry, South Korea anticipates “significant changes” in the trade and industrial environment globally with the start of the new Trump administration.

The ministry expressed concerns over potential reductions in investment incentives in the US, which could result from amendments to the Inflation Reduction Act and the Chips and Science Act.

Recently, Trump announced plans to implement a 25% tariff on products from Mexico and Canada and a 10% additional tariff on Chinese goods, citing issues with illegal immigration and illicit drug trade.

Last month, South Korea-based memory chip maker Samsung Electronics reported that its third-quarter earnings were affected by the increased supply of traditional chips from Chinese competitors.