South Korea is set to establish a 5 trillion won semiconductor fund, worth approximately $3.52 billion, aimed at supporting chip-material suppliers, component manufacturers, equipment companies and fabless chip designers. The government will provide an additional 5 trillion won in trade finance, creating a combined financing package designed to accelerate semiconductor manufacturing hubs and strengthen smaller companies across the supply chain.
The measures were announced by Presidential Chief of Staff Kang Hoon-sik following a meeting chaired by President Lee Jae Myung. Seoul will also establish a 10-year, 1 trillion won programme to promote cooperation between large semiconductor companies and smaller suppliers across product development, testing and production.
The government plans to seek parliamentary approval during 2026 for a Mega Special Zone Act, which would be aimed at speeding up permits, environmental reviews and supporting infrastructure for semiconductor projects.
$576 Billion Semiconductor Expansion
The financing package forms part of the semiconductor megaproject unveiled in June. Samsung Electronics, SK Hynix, suppliers and local governments are expected to invest more than $576 billion in new manufacturing projects, including major fabrication plants in South Korea’s southwest.
Samsung and SK Hynix together account for roughly two-thirds of global memory-chip production, placing the expansion at the centre of the worldwide response to AI-driven demand for high-bandwidth memory and advanced data-centre components.
Gwangju-South Jeolla Site Identified
Authorities have designated an 8.3 million-square-metre site in the Gwangju-South Jeolla region as a candidate national industrial complex.
President Lee has asked the Defence Ministry to relocate functions associated with a military air base at Gwangju by mid-2028 to enable development of the site. Temporary dispersal and relocation of military facilities are expected to be completed during the second half of 2028.
Water and Power Infrastructure Planned
Infrastructure development is being planned alongside semiconductor factory approvals.
The government intends to secure 650,000 metric tons of water per day by 2030 for the southwestern semiconductor cluster. The supply is expected to come through recycled wastewater and resources from nearby dams.
At Yongin, South Korea’s flagship semiconductor cluster south of Seoul, the plan calls for 14.7 gigawatts of electricity by 2041. The power supply is expected to combine cogeneration, liquefied-natural-gas generation and transmission from other regions.
More Projects and R&D Planned
Semiconductor projects worth more than 350 trillion won in other regions are scheduled to begin construction or facility expansion this year. Another 57 trillion won in research and development programmes is also due to begin.
South Korea’s strategy combines manufacturer capital expenditure with supplier financing, regional infrastructure development and faster administrative approvals.
Implications for India and the Regional Supply Chain
The scale of South Korea’s programme provides a direct benchmark for India’s Rs 1,27,500 crore Semicon 2.0 programme, particularly across materials, equipment, packaging and talent.
The expansion is also expected to influence the regional market for fabrication equipment, specialist engineers, chemicals, substrates, water systems and power infrastructure.
Both South Korea and India are using public support to attract and develop semiconductor supply-chain capabilities as demand grows around AI computing, advanced memory and strategic supply-chain resilience.
