The government has teamed up with SK hynix (000660) and the country's four major commercial banks to launch a 2 trillion won ($1.4 billion) shared-growth trade finance program for semiconductor suppliers. The aim is to lower borrowing costs for suppliers so that the chip boom translates into expanded investment by small and mid-sized companies.
The Ministry of Trade, Industry and Energy said it held a signing ceremony for the shared-growth trade finance program on the 19th at SK hynix's semiconductor cluster in Yongin, Gyeonggi Province, with Minister Kim Jung-kwan attending. SK hynix, the Korea Trade Insurance Corporation and KB Kookmin Bank, Shinhan Bank, Woori Bank and Hana Bank signed the agreement. It is the largest single-company agreement since the export supply chain guarantee program was introduced in August last year.
Under the program, the Korea Trade Insurance Corporation provides guarantees based on contributions from the conglomerate and the banks, allowing suppliers to borrow from the banks at lower interest rates. Adding guarantees on top of the contributions from the company and the banks makes it possible to supply more funds than the actual amount contributed. The goal is to ease funding burdens so that the chip boom leads to capital investment and technology development at suppliers of materials, parts and equipment.
Eligible borrowers are suppliers recommended by SK hynix. Those that pass the Korea Trade Insurance Corporation's guarantee review can take out loans from the participating banks at rates up to 2.5 percentage points lower. The guarantee ratio will rise to 100% from 90%, and the guarantee period will be extended to three years from one year. The banks will cover the entire guarantee fee for three years, further reducing suppliers' financing costs. Reflecting the semiconductor industry's need for large-scale investment, the maximum guarantee limit will also be set 50% higher than in other industries.
The government plans to expand shared-growth trade finance for the semiconductor sector to at least 5 trillion won. It intends to further increase funding for suppliers so that the boom enjoyed by large chipmakers feeds into investment and growth at small and mid-sized companies.
With this agreement, total shared-growth trade finance, including semiconductors, has grown to 4.4 trillion won. That figure combines 2.4 trillion won raised in sectors such as autos, shipbuilding and steel with 2 trillion won for semiconductors. The government plans to expand support for the chip sector while broadening the program to defense, nuclear power and biotechnology, raising the total to 10 trillion won this year.
Kim also reviewed progress on SK hynix's first fab in Yongin and its Trinity Fab the same day. The Trinity Fab is a facility that helps materials, parts and equipment companies test and verify products they have developed in an actual mass-production environment. Beyond funding support and product verification, the government is also backing research and development, a new semiconductor fund and workforce training. The plan is to build a chip ecosystem in which large companies and their suppliers grow together.
"To build a shared-growth ecosystem in which the warmth of the semiconductor sector spreads evenly to small and mid-sized companies, we will actively support the Growing Together project, a new semiconductor fund and workforce training," Kim said.
