South Korea to launch US$3.5 bil chip fund, speed development of semiconductor hubs

Summary: South Korea is launching a five trillion won semiconductor fund aimed at chip materials, parts, equipment, and fabless companies, alongside an additional five trillion won in trade finance for suppliers to accelerate new manufacturing hubs. Announced by Presidential Chief of Staff Kang Hoon-sik following a meeting chaired by President Lee Jae Myung, these steps expand upon Lee's semiconductor megaproject initiative from June. That broader initiative involves major investments exceeding US$576 billion from Samsung Electronics, SK Hynix, and local partners, particularly focusing on new facilities in the country's southwest region. Additional government plans include a 10-year, one trillion won program to foster collaboration between major corporations and smaller suppliers, as well as pushing for the passage of a Mega Special Zone Act to streamline permits, environmental reviews, and infrastructure development. To support these complexes, the administration has urged the Defense Ministry to relocate a military air base in Gwangju by mid-2028 to make way for a chip manufacturing complex, with regional authorities securing utilities like 650,000 metric tons of daily water for the Gwangju-South Jeolla region by 2030 and 14.7 gigawatts of electricity for the Yongin cluster by 2041. With further nationwide megaprojects and research and development initiatives launching this year, the administration views expanded semiconductor capacity as vital for meeting rising artificial intelligence demand beyond what current bases in Yongin and Pyeongtaek can provide. https://www.nst.com.my/amp/business/economy/2026/08/1508336/south-korea-launch-us35bil-chip-fund-speed-development