South Korea Unveils $3.5 Billion Chip Fund for Tech Hubs
- tech360.tv
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South Korea is to establish a new semiconductor fund worth 5 trillion won (USD 3.52 billion), according to a presidential official. This fund aims to support promising companies involved in chip materials, parts, equipment, and fabless design. The move represents part of Seoul's broader strategy to accelerate the development of new chip manufacturing hubs nationwide.
Presidential Chief of Staff Kang Hoon-sik indicated that a further 5 trillion won (USD 3.52 billion) in trade finance would be provided to suppliers. These measures form part of President Lee Jae Myung's semiconductor megaproject, initially announced in June. Under this initiative, Samsung Electronics, SK Hynix, their suppliers, and local governments anticipate investing more than USD 576 billion into new chip manufacturing facilities, including significant fabrication sites in the country's southwest region.
The government also plans to introduce a programme lasting ten years, valued at 1 trillion won (USD 0.704 billion). This programme will support cooperative efforts between larger corporations and their smaller suppliers, covering stages such as semiconductor development, testing, and production. So, authorities intend to seek parliamentary passage of a Mega Special Zone Act this year. This legislation aims to expedite necessary permits, environmental reviews, and infrastructure construction for these projects.
President Lee urged the Defence Ministry to relocate the functions of a military air base located in Gwangju. This relocation, targeted for completion by mid-2028, is intended to hasten the establishment of a semiconductor manufacturing complex planned for that specific site. The government has already designated the 8.3 million square metre area as a prospective national industrial complex. Furthermore, the plan includes the full relocation and temporary dispersal of military facilities by the latter half of 2028.
Mr Kang confirmed the government's commitment to ensuring timely provision of power and water supplies for new semiconductor projects. For instance, the planned chip cluster in the Gwangju South Jeolla region requires 650,000 metric tons of water daily by 2030. This supply is expected to derive from recycled wastewater and resources from nearby dams. The Yongin semiconductor cluster, a flagship manufacturing project south of Seoul, is slated to receive 14.7 gigawatts of electricity by 2041 through cogeneration facilities, LNG generation, and power transfers from other regions.
Megaprojects across other national regions, amounting to over 350 trillion won (USD 246.4 billion), are scheduled to commence construction or facility expansions this year. And an additional 57 trillion won (USD 40.128 billion) in research and development projects are also set to begin. The Lee administration maintains that expanding semiconductor production capacity forms a core component of its industrial policy, asserting that current production bases in areas such as Yongin and Pyeongtaek will prove inadequate for future demand, particularly that driven by artificial intelligence.
South Korea will establish a 5 trillion won (USD 3.52 billion) semiconductor fund.
An additional 5 trillion won (USD 3.52 billion) in trade finance is earmarked for suppliers.
President Lee Jae Myung's administration aims to secure over USD 576 billion in chip manufacturing investments from industry and government.
A military air base in Gwangju is scheduled for relocation by mid-2028 to facilitate a new chip complex.
New legislation, the Mega Special Zone Act, is sought to streamline project development processes.
Source: Reuters
