South Korea's Ministry of Trade, Industry and Energy announced on Wednesday that the country will launch a 1 trillion won (approximately $687.8 million) project next month to develop artificial intelligence (AI) semiconductors for on-device applications.

According to the ministry, both the government and private companies will collectively invest 1 trillion won into the project over the next five years. The initiative aims to create around 10 types of AI chips that can be used in autonomous vehicles, smart home appliances, humanoid robots, and other applications.

This project is part of the South Korean government's broader strategy to promote AI transformation in manufacturing through its Manufacturing AI Transformation (M.AX) alliance. Launched in September last year, the alliance comprises approximately 1,000 leading companies and research institutions, including tech giant Samsung Electronics, automotive leader Hyundai Motor Group, home appliance manufacturer LG Electronics, and robotics firm Rainbow Robotics.

The ministry stated that the upcoming project will help South Korean companies reduce their technological reliance on foreign AI chip manufacturers.

The government plans to improve access for local fabless companies to foundries, assisting them in producing test products using advanced node technologies. It will also strengthen financial support for the semiconductor sector by establishing a dedicated investment fund for fabless firms.

The ministry added that support will be extended to companies producing mid-tier chips for the automotive, communications, and defense industries.