South Korea to boost aid for chipmakers to $23 billion, expanding extra budget

South Korea’s government is planning to increase support for chip makers to around $23 billion, proposing a bigger-than-expected supplementary budget that will also dial up financial aid for the broader economy and wildfire disaster relief.

The proposal would boost the supplementary budget to around 12 trillion won, equivalent to $8.45 billion, or 2 trillion won more than initially planned, Finance Minister Choi Sang-mok said Tuesday.

At a meeting to lay out the budget proposal, Choi said the government will boost its aid package for the semiconductor sector to 33 trillion won–about $23.23 billion–from its previous pledge of 26 trillion won unveiled last year. That includes an additional 3 trillion won in low-interest-rate loans for the chip industry, bringing total financing to 20 trillion won over the next three years, he added.

The fiscal stimulus plan comes after South Korea last week rolled out emergency support measures for its auto sector to ease the impact of U.S. President Trump’s tariffs, which Seoul says will cause significant damage to key exports like cars, semiconductors and electronics.

The Trump administration has imposed a 25% levy on all vehicles shipped to the U.S., effective since early this month, and a duty on auto parts set to kick in later. Trump also announced a separate 25% reciprocal tariff on South Korea but has paused the measure to allow for trade negotiations.

South Korea’s acting president, Han Duck-soo, who spoke with Trump over the phone last week, said Monday that Seoul would start tariff negotiations with the U.S. as soon as possible, and will send a negotiating team led by the trade minister to Washington.

Around 4 trillion won of state investments and economic support have also been earmarked for South Korea’s commerce sector and artificial-intelligence industries, with the government planning to dedicate some of the extra spending to securing supplies of advanced graphics processing units for AI computing infrastructure.

The extra budget will also include more than 3 trillion won of aid to better respond to the forest fires that ravaged South Korea in March, killing dozens of people as well as displacing tens of thousands and destroying property.

Write to Kwanwoo Jun at Kwanwoo.Jun@wsj.com