South Korea Announces New Fund Worth 5 Trillion South Korean Won, Focusing on Semiconductor Materials, Components, and Equipment

The South Korean government announced the establishment of a 5 trillion South Korean won special semiconductor fund and implemented a package of supporting policies to accelerate the semiconductor "Super Project," which has a scale exceeding 576 trillion South Korean won.

Kang Hoon-sik, Chief of Staff to the President, announced at a press conference on Monday that the government will provide an additional 5 trillion South Korean won in trade financing to support suppliers and invest 1 trillion South Korean won over ten years to promote good cooperation between large enterprises and small and medium-sized suppliers. The government also plans to push for the passage of the "Super Special Zone Act" by the National Assembly within the year to simplify procedures and accelerate the construction of cooperative infrastructure.

Comprehensive Implementation of Financial Support

The South Korean government intends to establish a 5 trillion South Korean won semiconductor fund, primarily targeting chip materials, components, equipment companies with growth potential, and fabless design firms.

At the same time, the government is providing equivalent trade financing to chip suppliers, bringing the total funding scale to 10 trillion South Korean won (approximately $7 billion).

The government will also establish a ten-year, 1 trillion South Korean won cooperation support program covering all stages of semiconductor R&D, testing, and mass production, aiming to strengthen supply chain collaboration capabilities between large enterprises and small and medium-sized suppliers.

Three Major Super Projects: Samsung and SK Hynix Lead Hundreds of Billions in Investment

These measures are part of the semiconductor "Super Project" released by the Lee Jae-myung administration in June this year.

Under this framework, Samsung Electronics and SK Hynix have jointly committed to investing 800 trillion South Korean won (approximately $564.9 billion) in the Honam region of southwestern South Korea, centered on Gwangju, representing the largest investment commitment for a single region.

The overall "Three Major Super Projects" include three directions: semiconductor production and supply, artificial intelligence, and regional AI data centers. It is expected to drive total investments exceeding 576 trillion South Korean won from Samsung Electronics, SK Hynix, and hundreds of thousands of other entities. The Lee Jae-myung administration has positioned the expansion of semiconductor capacity as the core of its industrial strategy, believing that existing production bases in Yongin and Pyeongtaek are insufficient to meet the demand growth driven by artificial intelligence.

Supporting Guarantees: Power and Water Resources to Be Met on Schedule

Basic power supply is a key constraint for the implementation of the Super Project. Kang Hoon-sik stated that the government will ensure that the electricity and water resources required for each chip project are ready on schedule.

For chip supply in Gwangju and South Jeolla Province, the plan aims to achieve a daily water supply capacity of 650,000 tons by 2030 through restoring water resources and drawing water from surrounding reservoirs. For the Yongin semiconductor supply south of Seoul—South Korea's flagship chip manufacturing project—the government plans to provide 14.7 gigawatts of power supply by 2041 through combined heat and power generation, liquefied natural gas power generation, and cross-regional power regulation and distribution.

Regional Layout: Projects Worth Over 350 Trillion South Korean Won to Start This Year

While advancing key materials, the South Korean government is extending its semiconductor investment layout to broader regions.

Kang Hoon-sik stated that super projects totaling more than 350 trillion South Korean won across the country are scheduled to commence or launch this year, with approximately 57 trillion South Korean won in R&D projects starting simultaneously.

Lee Jae-myung emphasized that the ultimate goal of this investment plan is to drive an engine for dispersed layout nationwide, making regional cities new centers for future industries. "The results achieved through the joint efforts of the whole society are not targeted at specific companies or specific regions," he stated, designating next year as the "golden period" for South Korea's efforts to "forge a new legacy."