The South Korean government announced it would make available KRW200bn (US$176m) in grants to help strengthen the country's automotive semiconductor manufacturing industry.

Finance minister Hong Nam-ki said the grants would be available over the next two years to help develop next-generation semiconductors for the automotive sector.

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The government also said it would work with local carmakers to help overcome the current shortage of semiconductors which it expected would last until the third quarter of this year.

The global vehicle industry is currently struggling with a shortage of processing chips after the IT industry diverted capacity last year to meet growing global demand for consumer electronics.

Hong said in a statement "as automotive chips are key parts of the car industry and demand for future-generation cars is high, it is urgent to ease a short-term supply shortage, enhance supply channels and preempt the market".

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The government was also considering allowing state-owned banks to offer low interest-rate loans to companies looking to expand capacity for automotive chips-related operations.

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Hyundai was said to have weathered the global semiconductor shortage better than most so far with reports last month suggesting it maintained its stockpile last year and even accelerated purchases towards the end of the year.

South Korea also had some strong global semiconductor manufacturers, including SK Hynix and Samsung Electronics.

But the global automotive sector relies heavily on Taiwanese manufacturers such as TSMC for their processors, according to reports.