Korea Technology Finance Corp. to provide W100b in financing for Hyundai Motor, Kia chipmaker partners

Korea Technology Finance Corp. has teamed up with Hyundai Motor, Kia and Industrial Bank of Korea to provide 100 billion won ($68.2 million) in financial support to automotive semiconductor suppliers.

The state-run technology guarantee agency, known as Kibo, announced Thursday it had signed an MOU with the three partners to expand financial access for chipmakers in Hyundai Motor and Kia's supply chains. The agreement aims to help those suppliers strengthen their technological competitiveness and support sustainable growth in the automotive semiconductor industry amid global supply chain realignment and intensifying technology competition.

Under the deal, Kibo will supply 100 billion won in guarantee financing, drawing on 2.5 billion won in special contributions from Hyundai Motor and Kia, 2.5 billion won from Industrial Bank of Korea, and an additional 1 billion won in guarantee fee subsidies from the bank.

Kibo will raise its guarantee coverage ratio from 85 percent to 100 percent for supported companies, applying the higher rate for three years, and will offer a fixed guarantee fee rate of 0.5 percent over the same period. Industrial Bank of Korea will subsidize 0.5 percentage points of the guarantee fee for two years, effectively allowing eligible companies to use technology guarantees at no cost during that period.

Eligible recipients are new-technology businesses that meet Kibo's guarantee requirements and are recommended by Hyundai Motor or Kia as partners in the semiconductor or display sectors. Each company may receive up to 20 billion won in support.

Automotive semiconductors are a critical component of next-generation vehicles, with demand rising rapidly as electrification and autonomous driving technology spread. The industry's focus on supply chain stability has grown since automakers faced severe chip shortages following the COVID-19 pandemic, and both the government and industry have stepped up support for domestic semiconductor suppliers' technological capabilities and production infrastructure.

The four institutions said they plan to build on the agreement by expanding financial support for Hyundai Motor and Kia's semiconductor partners and continuing cooperation to strengthen the automotive chip ecosystem and stabilize the supply chain for key future-vehicle components.

"This agreement is a model of shared-growth finance, bringing together a major automaker, a bank and a policy finance institution to broaden the financial support base for partner companies," Kibo Chairman Kwon Hyung-taek said. "We will continue to expand cooperation with related institutions to back the growth of technologically capable chipmakers and actively contribute to strengthening the competitiveness of the future vehicle industry."