S Korea unveils $3.5 bn chip fund

South Korea plans to invest a substantial $3.5 billion in a semiconductor fund aimed at bolstering key chip components, equipment, and fabless companies, according to a presidential official. This initiative is part of President Lee Jae Myung's semiconductor megaproject plan, which includes Samsung Electronics and SK Hynix, among others, investing over $576 billion in new chip manufacturing projects. The government will also allocate an additional 5 trillion won in trade finance to support suppliers.

Kang Hoon-sik, the Presidential Chief of Staff, announced these measures during a press briefing following a meeting chaired by President Lee. The fund is designed to back promising semiconductor materials, parts, equipment, and companies, while a separate 10-year program will provide 1 trillion won to foster collaboration between large firms and smaller suppliers throughout the semiconductor development process.

To expedite the development of semiconductor manufacturing hubs, the government plans to pass the Mega Special Zone Act within the year. This legislation aims to streamline permit acquisition, environmental assessments, and infrastructure construction. The Defense Ministry is also expected to relocate certain military functions by mid-2028, allowing for the construction of a semiconductor manufacturing complex on the site, which has been designated as a national industrial complex.

In the southwestern Gwangju-South Jeolla region, authorities intend to supply 650,000 metric tons of water daily by 2030, primarily through recycled wastewater and supplies from nearby dams. The Yongin semiconductor cluster, South Korea's flagship chip manufacturing project south of Seoul, will be supplied with 14.7 gigawatts of electricity by 2041, generated through a combination of cogeneration facilities, LNG generation, and power from other regions.