South Korea to create fund from chip windfall to spur growth, address inequality

SEOUL- South Korea plans to establish a future fund using extra tax revenue generated by a semiconductor boom to invest in growth engines, support for younger generations and efforts to address widening inequality, a top government official said on Sunday.

Speaking at a meeting between the government and the ruling Democratic Party, Presidential Chief of Staff Kang Hoon-sik said President Lee Jae Myung's administration would use the "Future Response Fund" to help finance major national investment projects and strengthen the country's long-term competitiveness.

"At this critical juncture that will determine South Korea's future, we must not squander additional tax revenue generated by the semiconductor boom and other factors," Kang said.

He said the fund would support the government's three "mega projects", create new growth drivers, respond to what he described as "K-shaped" economic polarization and provide housing, startup and employment support for people in their 20s and 30s.

He called the proposed fund "a cornerstone" for realizing Lee's goal of making South Korea globally "irreplaceable" and urged close cooperation between the government and the ruling party to move quickly.

The comments come days after Lee unveiled three large-scale industrial projects across the country centered on semiconductors, physical AI and data centers, backed by hundreds of billions of dollars in planned investments by Samsung Electronics , SK Hynix and government agencies.

The strategy aims to strengthen South Korea's leadership in chip and AI-related industries while promoting growth outside the Seoul metropolitan area.

Prime Minister Han Sung-sook said on Sunday the projects could become a new growth engine if the government, ruling party and private sector worked as "one team", describing them as a 30-year strategy linking semiconductors, AI, data centres and physical AI.

Democratic Party floor leader Han Byung-do vowed legislative and budget support for the projects' early implementation.

(Reporting by Kyu-seok Shim; Editing by William Mallard and Jamie Freed/REUTERS)