Industry minister vows fiscal support exceeding rivals' to back W957tr semiconductor investment

The government will provide fiscal support surpassing that of rival nations to back 957 trillion won ($635 billion) in private-sector semiconductor investment.

Trade, Industry and Energy Minister Kim Jung-kwan announced the "mega-project: semiconductors and AI robots" strategy Monday at the National Fiscal Strategy Conference at Cheong Wa Dae. "China is committing 152 trillion won, Japan 95 trillion won and the United States 80 trillion won — major countries recognize the semiconductor race as a war for national survival and are pouring in astronomical fiscal resources," he said. "Korea also needs fiscal support at least on par with its competitors." He then laid out the strategy under that framework.

Kim outlined three directions for semiconductor support. First, the government said it would provide full backing for infrastructure — including land, water and power — to ensure large-scale private investment proceeds at pace. Through these measures, completion of the Yongin semiconductor cluster would be brought forward by 12 years, while a new semiconductor cluster in the Honam region is targeted to begin operation between 2030 and 2031.

The second priority is to comprehensively develop the relatively weak domestic materials, parts and equipment sector — along with packaging and foundry industries — to address existing vulnerabilities. Without strong materials, parts and equipment companies as a foundation, the government believes the gains from large-scale investment will flow to foreign firms.

The third priority is securing next-generation technologies, including AI semiconductors, power semiconductors and defense semiconductors. To that end, the government plans to concentrate support on large-scale R&D projects worth around 1 trillion won, aiming to stake out an early lead in the next-generation semiconductor market.

Institutional support will accompany the fiscal measures. The government plans to enact a "mega special zone law" within the year to grant the highest level of regulatory exemptions to semiconductor investors and put together a comprehensive support package covering tax incentives, investment promotion and infrastructure.

The existing Semiconductor Special Act will also be transformed into a powerful "action-oriented special act" responsible for carrying out large-scale national projects such as the mega-project.

Plans to foster the AI robot industry — another pillar of the AI transformation era — were also unveiled.

According to the Ministry of Trade, Industry and Energy, the humanoid robot budget of Shenzhen alone stands at 900 billion won, dwarfing South Korea's entire national budget for the sector of 100 billion won.

China also holds an 86 percent market share, while South Korea accounts for just 1 percent, making bold and preemptive fiscal investment an urgent priority.

In response, the government plans to establish sector-specific "data factories" across the country to develop a Korean-style robot foundation model. It will also create dedicated R&D programs to support key components with low domestic production rates, such as actuators and robotic hands.

The government also plans to develop humanoid robots tailored to 10 specific industries and deploy them at industrial sites.

A roadmap was also presented for the government to stimulate early demand through preemptive procurement to open up the market.

Last year, China's government purchased 45 percent of all humanoid robots produced, spurring investment in mass production, while South Korea's government procurement stood at zero.

To address this, the government will operate a cross-ministry robot demand task force to actively purchase AI research robots and similar equipment, while expanding demonstration and procurement subsidy budgets to stimulate private-sector demand.

"While the private sector is already running, we will swiftly deliver bold and sweeping fiscal and institutional support that keeps pace with our competitors, to complete South Korea's great leap forward," Kim said.