A new $3.5 billion fund will support South Korean chip materials, parts, equipment and fabless companies as the country expands capacity for the artificial intelligence (AI) era.
South Korea will establish a 5 trillion won (US$3.52 billion) semiconductor fund to support companies developing chip materials, components, equipment and fabless semiconductor solutions, as Seoul accelerates plans to expand domestic chip manufacturing.
Presidential chief of staff Kang Hoon-sik announced the initiative after a meeting chaired by President Lee Jae Myung. The government will also provide another 5 trillion won in trade finance to help semiconductor suppliers expand operations and strengthen their competitiveness.
The measures are part of President Lee’s broader semiconductor investment strategy, under which Samsung Electronics, SK Hynix, suppliers and local governments are expected to invest more than $576 billion in new semiconductor projects across the country.
Seoul will also launch a 10-year, 1 trillion won programme to promote cooperation between large chipmakers and smaller suppliers in semiconductor development, testing and manufacturing.
The government plans to introduce a Mega Special Zone Act this year to speed up permits, environmental approvals and infrastructure development for major chip projects.
Power and water availability are also being prioritised. Authorities aim to secure 650,000 tonnes of water per day by 2030 for the planned Gwangju–South Jeolla semiconductor cluster, using recycled wastewater and supplies from nearby dams.
For the Yongin semiconductor cluster south of Seoul, the government plans to secure 14.7GW of electricity by 2041 through cogeneration, liiquefied natural gas (LNG) generation and power imported from other regions.
The government expects semiconductor projects worth more than 350 trillion won in other regions to begin construction or expansion this year, along with 57 trillion won in research and development projects.
South Korea is expanding chip capacity to meet rising AI-driven demand, with the government warning that existing hubs around Yongin and Pyeongtaek may not be sufficient for future requirements.
