South Korea's government has announced the creation of a 5 trillion won semiconductor fund and a comprehensive policy package to accelerate a massive 576 trillion won semiconductor "mega-project."
Presidential Chief of Staff Kang Hoon-sik announced at a Monday press conference that the government will provide an additional 5 trillion won in trade financing to support suppliers and will invest 1 trillion won over ten years to foster collaboration between large corporations and small-to-medium suppliers. The government also plans to push for the passage of the "Super Special Zone Act" within the year to streamline processes and accelerate the construction of cooperative infrastructure.
Full Implementation of Financial Support
The South Korean government intends to establish a 5 trillion won semiconductor fund, focusing on chip materials, components, equipment companies, and fabless design firms with high growth potential. Concurrently, the government will provide an equivalent amount of trade financing to chip suppliers, bringing the total funding scale to 10 trillion won (approximately $7 billion). The government will also establish a 1 trillion won cooperation support program spanning ten years, covering semiconductor R&D, testing, and mass production stages, aimed at strengthening the industrial chain collaboration between large enterprises and small-to-medium suppliers.
Three Mega-Projects: Samsung and SK Hynix Lead Billions in Investment
These measures are part of the semiconductor "mega-project" announced by the Lee Jae-myung administration in June of this year. Under this framework, Samsung Electronics and SK Hynix have jointly committed to investing 800 trillion won (approximately $564.9 billion) in the Honam region of southwestern South Korea, centered on Gwangju, representing one of the largest regional investment commitments ever. The overall "three mega-projects" encompass semiconductor production supply, artificial intelligence, and regional AI data centers, expected to drive a combined investment of over 576 trillion won from Samsung Electronics, SK Hynix, and tens of thousands of others. The Lee Jae-myung administration has positioned the expansion of semiconductor production capacity as a core industrial strategy, with existing production bases in Yongin and Pyeongtaek deemed insufficient to meet the demand growth driven by AI.
Supporting Infrastructure: Power and Water Supply Secured
Basic power supply is a key constraint for the successful completion of the mega-projects. Kang Hoon-sik stated that the government will ensure the necessary power and water resources for each chip project are ready on schedule. For the chip supply in Gwangju and South Jeolla Province, the plan is to achieve a daily water supply capacity of 650,000 tons by 2030 through restoring water resources and utilizing water from nearby reservoirs. For the Yongin semiconductor supply cluster, located south of Seoul and South Korea's flagship chip manufacturing project, the government plans to provide 14.7 gigawatts of power by 2041 through combined heat and power plants, LNG power generation, and cross-regional power regulation.
Regional Layout: Projects Worth Over 350 Trillion Won to Start This Year
While advancing key materials, the South Korean government is also extending its semiconductor investment layout to a wider range of regions. Kang Hoon-sik stated that mega-projects totaling over 350 trillion won nationwide are scheduled to begin construction or initiation this year, with approximately 57 trillion won in R&D projects starting simultaneously. Lee Jae-myung emphasized that the ultimate goal of this investment plan is to drive a shift towards a nationwide distribution engine, making regional cities the new centers of future industries. "The results achieved through the collective efforts of the entire society are not targeted at specific companies or specific regions," he said, vowing to designate next year as a "golden period" for South Korea's efforts to "pioneer the future."