South Korea is stepping up efforts to expand its semiconductor industry, with the government planning a 5 trillion won ($3.52 billion) fund for promising chip materials, parts, equipment and fabless companies. Seoul will also provide another 5 trillion won in trade finance for suppliers, Presidential Chief of Staff Kang Hoon-sik said after a meeting chaired by President Lee Jae Myung on Monday.
“The government will create a new semiconductor fund worth about 5 trillion won focused on promising materials, parts and equipment firms and fabless companies,” Kang said.
The measures are part of Lee’s semiconductor megaproject announced in June. Under the plan, Samsung Electronics, SK Hynix, suppliers and local governments are expected to invest more than $576 billion in new chip manufacturing projects, including major fabrication facilities in southwest South Korea.
The government will also introduce a 10-year programme worth 1 trillion won to support cooperation between large companies and smaller suppliers in semiconductor development, testing and production.
Seoul will seek parliamentary approval for a Mega Special Zone Act within 2026. The legislation aims to speed up permits, environmental reviews and infrastructure development.
Lee also urged the Defence Ministry to relocate functions of a military air base in Gwangju by mid-2028 to accelerate a planned semiconductor manufacturing complex. The government has identified an 8.3 million-square-metre area as a candidate national industrial complex and plans to complete the relocation and temporary dispersal of military facilities by the second half of 2028.
The government will also ensure timely power and water supplies for new chip projects. For the Gwangju-South Jeolla chip cluster, authorities plan to secure 650,000 metric tons of water daily by 2030 through recycled wastewater and nearby dams.
For the Yongin semiconductor cluster south of Seoul, the government plans to provide 14.7 gigawatts of electricity by 2041 through cogeneration facilities, LNG generation and power from other regions.
Kang said projects worth more than 350 trillion won in other regions are scheduled to begin construction or facility expansions in 2026, while 57 trillion won in R&D projects are also set to start.
The Lee administration considers semiconductor capacity expansion a key industrial priority, citing rising AI-driven demand that existing production bases in Yongin and Pyeongtaek may not be able to meet.
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