SK hynix and South Korea’s industry ministry signed an agreement on 19 October for up to 2 trillion won ($1.5 billion) in loan guarantees for domestic semiconductor suppliers, extending a government financing programme to the chip sector, Yonhap reported.
Key points
- SK hynix and four banks will contribute a combined 100 billion won to support the programme.
- The state-run Korea Trade Insurance Corp. will provide up to 2 trillion won in guarantees to materials, parts and equipment suppliers.
- For suppliers put forward by SK hynix, borrowing limits can rise, rates can fall by up to 2.5 percentage points and guarantees can run for three years instead of one.
- Industry Minister Kim Jung-kwan said the government plans to increase financial support for the chip sector to more than 5 trillion won.
SK hynix and banks contribute 100 billion won
The agreement was signed at SK hynix’s semiconductor cluster promotion centre in Yongin, south of Seoul. A total of 100 billion won for the programme will come from SK hynix and four major banks. The Korea Trade Insurance Corp., known as K-SURE, will provide up to 2 trillion won in loan guarantees for companies supplying semiconductor materials, parts and equipment.
The terms give SK hynix a role in identifying suppliers for improved financing. Companies it recommends will be eligible for higher loan limits and interest rate cuts of up to 2.5 percentage points. Their guarantee period will rise from one year to three years. The contribution from SK hynix and the banks supports a programme whose stated guarantee capacity is provided by K-SURE.
SK hynix chief executive Kwak Noh-jung emphasised the importance of the semiconductor supply chain to global competitiveness and pledged closer cooperation with domestic suppliers.
Government extends guarantees to semiconductor suppliers
An earlier government commitment allocated 2.4 trillion won of loan guarantees to the automotive, shipbuilding and steel sectors. The semiconductor programme is its largest package involving a single sector, Yonhap reported. Both arrangements use guarantees as a means of improving access to finance for smaller companies working with major manufacturers.
Kim said chip-sector financial support is planned to exceed 5 trillion won, with the government also pursuing research, investment and workforce training. The 2 trillion won guarantee programme is the financing measure covered by the agreement signed with SK hynix.
Chip supplier shares fell from 12 to 16 October
The announcement follows a difficult stretch for listed Korean chip companies. Samsung Electronics shares fell 17.75% and SK hynix shares declined 24.33% between 12 and 16 October, according to Korea Exchange figures reported by Seoul Economic Daily. Several suppliers also recorded weekly declines of more than 20%.
Among them, Eugene Technology fell 25.35%, LB Semicon 22.09%, Hanmi Semiconductor 21.35%, Hana Micron 20.21% and Nepes Ark 20.18% over the same period. Earlier in October, supplier shares had risen even as the two large chipmakers declined. Hanmi Semiconductor, for example, gained 4.09% between 1 and 8 October before its later weekly fall.
The reversal came amid concerns about competition from Chinese memory manufacturers and the durability of AI investment, Seoul Economic Daily reported. Foreign investors sold a net 11.239 trillion won ($7.9 billion) of shares on South Korea’s main board between 12 and 16 October, about 74% more than the net 6.446 trillion won sold between 1 and 8 October.
On 15 October, Samsung and SK hynix shares slid as the Kospi halted trading, AI Affairs reported. Shinyoung Securities research head Kim Hak-kyun said the subsequent falls in supplier shares reflected a deterioration in sentiment towards risk assets across the chip sector rather than those suppliers’ individual earnings.
