South Korea announces $3.5B fund to boost its chip industry
What's the story
South Korea has announced a massive 5 trillion won ($3.52 billion) semiconductor fund to boost its chip industry. The fund will focus on promising materials, parts and equipment firms as well as fabless companies. This move is part of President Lee Jae Myung's larger "semiconductor megaproject," which was first unveiled in June.
Industry collaboration
Samsung, SK Hynix to invest over $576B in chip projects
The semiconductor megaproject is a joint effort between tech giants Samsung Electronics and SK Hynix, their suppliers, and local governments.
Together, they are expected to invest over $576 billion in new chip manufacturing projects. These include major fabrication facilities in the country's southwestern region.
The government will also provide an additional 5 trillion won in trade finance for suppliers to support this initiative.
Long-term plan
Government pushes for Mega Special Zone Act passage
Along with the semiconductor fund, South Korea will also launch a 10-year, 1 trillion won program.
This initiative aims to promote cooperation between large companies and smaller suppliers in semiconductor development, testing, and production.
The government is pushing for the passage of a Mega Special Zone Act at parliament this year. The act would expedite permits, environmental reviews, and infrastructure construction for these projects.
Infrastructure development
Relocation of military base to expedite development
President Lee has asked the Defence Ministry to move military airbase functions in Gwangju by mid-2028.
This is to speed up the development of a semiconductor manufacturing complex at the site.
The government has identified an 8.3 million-square-meter area as a candidate national industrial complex, and aims to complete relocation and temporary dispersal of military facilities by H2 2028.
Resource management
Timely power and water supplies for new projects assured
The government has promised to ensure timely power and water supplies for new semiconductor projects.
For the planned chip cluster in Gwangju-South Jeolla region, authorities plan to secure 650,000 metric tons of water daily by 2030 through recycled wastewater and dam supplies.
For Yongin semiconductor cluster near Seoul, a flagship project, the government plans to supply 14.7 gigawatts of electricity by 2041 through cogeneration facilities, LNG generation and regional power sources.