South Korea will launch a 5 trillion won ($3.52 billion) semiconductor fund targeting chip materials, parts, equipment and fabless companies, Presidential Chief of Staff Kang Hoon-sik said on August 10 after a meeting chaired by President Lee Jae Myung. The government will provide a further 5 trillion won in trade finance for suppliers.
Aimed Away From The Champions
Rather than routing capital primarily to Samsung Electronics and SK Hynix, the fund is explicitly designed for the layer beneath them — materials, components, equipment and fabless design firms — that Seoul sees as the weakest link in a supply chain increasingly stressed by AI demand. A parallel 10-year, 1 trillion won programme will subsidise cooperation between large customers and smaller suppliers across development, testing and production.
Part Of A $576B Megaproject
The measures are part of Lee's semiconductor megaproject unveiled in June, under which Samsung, SK Hynix, suppliers and local governments are expected to invest more than $576 billion in new manufacturing across the southwest region and the Yongin cluster south of Seoul. Lee also urged the Defence Ministry to relocate a Gwangju military airbase by mid-2028 to unlock a 8.3 million square metre chip complex, and confirmed plans to secure 14.7 GW of power for Yongin by 2041 and 650,000 metric tons of daily water for the Gwangju-South Jeolla cluster by 2030.
Mega Special Zone Act
The government will also seek passage of a Mega Special Zone Act within the year to fast-track permits, environmental reviews and infrastructure construction. The package comes as SK Hynix ships 16-layer HBM4 and Samsung Foundry chases 2nm orders against TSMC. It follows TSMC's $265B Arizona expansion, escalating the global race for silicon sovereignty.
Reporting based on a Reuters briefing by South Korea's Presidential Chief of Staff Kang Hoon-sik, published by Yahoo Finance.