South Korea to launch multi-billion dollar chip fund to boost semiconductor hubs

South Korea announced the creation of the Future Response Fund on July 5, a vehicle that will channel surplus semiconductor tax revenues into chips, physical AI, and AI data centers, as part of a broader investment push totaling at least $880B anchored by Samsung Electronics and SK Hynix. The fund targets semiconductor technology advancement, physical AI development, and AI data center buildouts, with legislation expected in August and potential launch by December. South Korea currently holds roughly 18% of the global semiconductor market.

Via cepa.org South Korea to launch multi-billion dollar chip fund to boost semiconductor hubs The "Future Response Fund" will channel surplus semiconductor tax revenues into chips, AI data centers, and regional development across the country. South Korea is betting big on its chip industry, again. The country announced the creation of the Future Response Fund on July 5, a new vehicle designed to funnel surplus tax revenues from its booming semiconductor sector back into strategic investments in chips, physical AI, and AI data centers. The fund is part of a broader investment push that combines public and private capital totaling at least $880B, anchored by commitments from Samsung Electronics and SK Hynix. How the fund works South Korea’s top memory chip manufacturers are projected to generate corporate tax revenues exceeding $65B annually. Rather than let those windfalls sit in general government coffers, Seoul wants to convert them into long-term strategic bets on the technologies it believes will define the next decade. The fund will target three areas: semiconductor technology advancement, physical AI development, and AI data center buildouts. Legislation to formally establish the fund is expected to be presented to parliament in August, with a potential operational launch by December. The total size of the fund will ultimately depend on realized tax revenues and parliamentary approval. Samsung and SK Hynix are also planning to build two new chip fabrication plants each in South Korea’s southwest region. A pattern of aggressive industrial policy The K-CHIPS Act already provides tax credits for semiconductor facilities and research expenditures. In early 2024, the government unveiled ambitious plans for a major industrial cluster in Gyeonggi Province. President Lee Jae Myung’s recent investment blueprint, which the Future Response Fund now operationalizes, represents the latest step in this trajectory. South Korea currently holds roughly 18% of the global semiconductor market. The fund aims to foster balanced national growth, particularly in areas outside the capital, while also channeling support toward youth housing and employment. What this means for the global chip landscape For Samsung and SK Hynix specifically, the new fab plants in the southwest could diversify production risk. High-bandwidth memory, the type of chip that SK Hynix has been selling to companies like Nvidia for AI training, has been in particularly short supply. Disclosure: This article was edited by Editorial Team. For more information on how we create and review content, see our Editorial Policy https://cryptobriefing.com/editorial-policy/ .