South Korea plans to channel excess tax revenue from its semiconductor-led growth into AI, talent development and support for younger generations.
South Korea plans to establish a Future Response Fund to use higher-than-expected tax revenues generated during periods of strong economic growth to support younger generations and invest in future industries such as artificial intelligence (AI).
According to the country’s budget ministry, the proposed fund will finance initiatives to help young people find jobs, purchase homes and start families. It will also support investments in AI, regional development and talent development.
The fund would mainly be financed through tax revenue collected above a benchmark based on the average growth in domestic tax receipts over previous years. Excess revenue generated during strong economic periods would be accumulated and later used when tax collections weaken, allowing the government to provide support during periods of slower growth.
The proposal comes as South Korea benefits from a surge in semiconductor demand driven by the global AI boom. Samsung Electronics and SK hynix have recorded strong earnings as demand for chips, particularly memory products used in AI infrastructure, continues to increase.
The government is also seeking to address challenges faced by younger people, including limited job opportunities, housing affordability and the country’s low birth rate. Official data showed South Korea’s youth unemployment rate reached 6.8% in July.
President Lee Jae Myung has pledged to expand opportunities for young people while warning that the rapid adoption of AI could further affect employment prospects by changing the nature of work.
The fund will also be linked to an overhaul of education financing, with the government planning to direct more resources towards talent development, higher education and lifelong learning.
South Korea is expected to submit legislation related to the fund to parliament alongside its 2027 budget proposal next month. The initiative aims to convert the benefits of the country’s semiconductor-led growth into longer-term investments in technology, talent and social development.
