Aug-10-2026 — South Korea has announced plans to establish a KRW 5 trillion ($3.5 billion) semiconductor investment fund aimed at strengthening the country’s domestic materials, components, equipment and fabless semiconductor ecosystem.
The initiative forms part of a broader government strategy to ensure that the massive investments being made by Samsung Electronics, SK hynix and other Korean technology companies create wider benefits across the domestic semiconductor supply chain. In addition to the new investment fund, the Korean government plans to provide another KRW 5 trillion in trade financing for semiconductor materials, parts and equipment suppliers, while launching a separate KRW 1 trillion, 10-year supplier development program. Together, the measures represent one of South Korea’s most comprehensive efforts to strengthen the semiconductor ecosystem beyond the country’s large memory manufacturers.
The new KRW 5 trillion semiconductor fund will focus on promising Korean companies involved in:
The goal is to improve access to capital for smaller companies that can support Korea’s rapidly expanding semiconductor manufacturing base. South Korea is already home to two of the world’s largest memory manufacturers — Samsung Electronics and SK hynix — but many parts of the semiconductor supply chain remain dependent on overseas suppliers. The latest program is intended to increase the competitiveness and scale of Korean semiconductor suppliers while helping them participate more directly in future investment cycles.
The government will also provide approximately KRW 5 trillion in trade financing for semiconductor materials, components and equipment companies. This financing is expected to support suppliers expanding internationally or increasing exports to global semiconductor manufacturers. For smaller semiconductor suppliers, access to working capital and export financing can be a significant constraint, particularly when customers require long qualification cycles and large upfront investments in manufacturing capacity. The new financing could therefore help Korean equipment and materials companies scale more rapidly alongside the expansion of Samsung and SK hynix.
South Korea is also introducing a KRW 1 trillion “Growing Together” semiconductor program over a period of 10 years. The program is designed to encourage closer cooperation between large semiconductor manufacturers and smaller domestic suppliers. Government officials said the initiative would support companies throughout the full commercialization process, including:
Technology development → Evaluation → Validation → Mass production
This is particularly important in the semiconductor industry because qualifying a new material, chemical or manufacturing tool can take several years. Even technically strong suppliers can struggle to enter production if they do not have sufficient opportunities to test their technologies inside large-volume semiconductor fabs. By directly connecting suppliers with major chipmakers, the Korean government hopes to shorten this commercialization cycle.
South Korea is entering one of the largest semiconductor investment cycles in its history. Samsung Electronics and SK hynix are planning enormous manufacturing investments in areas including:
However, building new fabs also requires billions of dollars of semiconductor manufacturing equipment, chemicals, materials, substrates, gases and other technologies. The government’s objective is to ensure that a larger percentage of this spending flows to Korean suppliers. This could create substantial opportunities for domestic companies operating in areas such as deposition, etching, cleaning, inspection, metrology, specialty chemicals, photoresists, wafers, substrates and advanced packaging.
The semiconductor supply chain became a major strategic issue for South Korea following trade tensions with Japan in 2019. Japan introduced export restrictions on several critical semiconductor materials, including photoresists and high-purity chemicals used by Korean semiconductor manufacturers. Since then, South Korea has accelerated efforts to develop domestic semiconductor materials, components and equipment suppliers. The country previously established a target of increasing the localization rate of semiconductor materials, components and equipment from approximately 30% to 50% by 2030.
The new KRW 5 trillion fund represents a significant expansion of that strategy. Earlier semiconductor ecosystem funds were measured at approximately KRW 1.1 trillion, meaning the latest program is several times larger than previous initiatives.
The timing of the investment is particularly significant because artificial intelligence is creating new semiconductor supply-chain requirements. SK hynix and Samsung Electronics are both expanding production of High Bandwidth Memory (HBM) for AI accelerators. HBM manufacturing requires sophisticated semiconductor technologies including:
As HBM becomes increasingly important to AI infrastructure, suppliers that can support advanced memory manufacturing are likely to become strategically important. Korea has already announced investments aimed at increasing domestic production of semiconductor materials used in advanced packaging and HBM. The new semiconductor fund could accelerate this development.
One notable aspect of the initiative is that it is not limited to semiconductor manufacturing suppliers. The fund will also target fabless semiconductor companies.
South Korea has historically been much stronger in memory manufacturing than in fabless semiconductor design. Companies such as Samsung and SK hynix dominate global memory markets, while the Korean fabless ecosystem remains relatively small compared with the United States, Taiwan and China. Supporting fabless companies could therefore help Korea diversify beyond memory and develop more companies targeting applications such as:
This could also increase demand for domestic foundry services and semiconductor IP.
The government funding is part of a much larger expansion of South Korea’s semiconductor manufacturing infrastructure. Major semiconductor projects are underway across several regions. Samsung Electronics and SK hynix are investing heavily in the Yongin semiconductor cluster, which is expected to become one of the largest semiconductor manufacturing concentrations in the world. The Korean government estimates that the Yongin region could eventually require approximately 14.7 GW of electricity by 2041, illustrating the enormous scale of the planned fabs.
Infrastructure investment will include:
The government is also considering legislation designed to accelerate environmental approvals, permitting and infrastructure development for strategically important industrial projects.
South Korea is additionally evaluating the development of another semiconductor industrial cluster around Gwangju, in the southwest of the country. Approximately 2.5 million pyeong of land currently occupied by a military airport has been identified as a candidate site for a new national industrial complex. The government plans to relocate the military facilities and make the site available for industrial development. Water infrastructure is also being planned for semiconductor production in the wider Honam region. The project could help spread semiconductor manufacturing investment beyond Korea’s existing concentration around Seoul, Yongin, Icheon and Cheongju.
The latest initiative demonstrates an important shift in Korea’s semiconductor policy. Government support is increasingly moving beyond the construction of large fabs. Instead, Korea is attempting to build an entire semiconductor ecosystem around those fabs, including:
| Area | Government Focus |
|---|---|
| Semiconductor materials | Domestic supply and localization |
| Manufacturing equipment | Technology development and qualification |
| Fabless companies | Investment and growth financing |
| Advanced packaging | HBM and AI applications |
| Exporting suppliers | KRW 5 trillion trade financing |
| Supplier collaboration | KRW 1 trillion, 10-year program |
| Infrastructure | Power, water, transport and industrial zones |
This strategy could become increasingly important as semiconductor manufacturing becomes more geographically concentrated and governments seek greater supply-chain resilience.
South Korea already occupies a critical position in the global semiconductor industry through Samsung Electronics and SK hynix. But much of the country’s semiconductor strength has historically been concentrated in large memory manufacturers. The new funding programs indicate that Korea now wants to expand that leadership across the entire semiconductor value chain.
If successful, the strategy could create stronger Korean suppliers of semiconductor equipment, materials, advanced packaging technology and chip design — while reducing dependence on overseas semiconductor technologies. For companies supplying Samsung, SK hynix and Korea’s rapidly expanding semiconductor clusters, the next decade could therefore represent one of the largest semiconductor infrastructure opportunities in the world.
Key figures
| Program | Amount |
| Semiconductor investment fund | KRW 5 trillion (~$3.5B) |
| Trade financing for suppliers | KRW 5 trillion (~$3.5B) |
| 10-year supplier development program | KRW 1 trillion |
| Target areas | Materials, components, equipment and fabless |
| Korea localization target | 50% by 2030 |
| Yongin future electricity demand | Approx. 14.7 GW by 2041 |
Sources: South Korean Presidential Office, Reuters, Korean government semiconductor policy announcements.