South Korea to Set Up a $34 B Funding Facility for Chips, AI, and EV Technologies
South Korea has announced plans to set up a $34 billion policy fund to finance companies that develop strategic technologies like semiconductors and autos. South Korea’s funding for chips comes at a time when protectionism and competition have intensified globally, Reuters reported.
The goal of the policy fund is to increase long-term investments and support research programs and early-phase infrastructural projects. The fund will be managed by the South Korean government through the Korea Development Bank. It will be financed through bonds guaranteed by the state with the managing bank covering operational costs.
Staying Ahead of the Curve
Speaking at a ministerial meeting on economic affairs and industrial competitiveness, South Korea’s acting President Choi Sang-mok underscored the accelerating global tech race and emphasized the need for the country to maintain a lead in key sectors.
“The ongoing tech race among major economies is also accelerating, as the industrial landscape involving advanced technologies such as chips, AI, and EVs is changing rapidly. First and foremost, we should be ahead of the curve,” Choi said on March 5.
South Korea plans to merge previous financial support programs that are offered to the semiconductor industry under the new South Korea National Strategic Industries Fund. To underpin its latest move, the government of South Korea also introduced new policies that are designed to attract talent in highly competitive industries across the globe.
“Competitiveness in advanced strategic industries has emerged to be the core of national economic security amid heightened external uncertainty under the new U.S. administration,” the government said.
Focus on Economic Security
The policy fund will offer low-interest investments and loans over the coming five years. Its focus will be on national strategic technologies that include AI, aerospace, biopharmaceuticals, future mobility, and rechargeable batteries.
The government plans to protect these industries and provide them with targeted financial support in response to the rising global competition and supply chain fragmentation. The South Korean government sees growth and development of these technologies as critical in enhancing the country’s national economic security in the face of increased global uncertainty and protectionism.
The Initiative will integrate the 17 Trillion won South Korea semiconductor industry financial support program that was launched in 2024. It will also incorporate the 34 Trillion won program for biotech and EV batteries. Through the policy fund, the South Korean government expects financial support to hit the 100 trillion won mark, with private banks providing additional funding.
To underpin its latest move, the government of South Korea announced the introduction of new policies that are designed to attract top talent from highly competitive industries across the globe. One strategy that the government plans to apply is offering permanent residency and top-tier visas to skilled foreigners that have experience working in leading global firms. This, the government says, will make it easier for them to enter local firms in advanced sectors.
Rising Trade Tensions
South Korea’s decision to launch a policy fund to finance development of strategic technologies comes at a time when trade tensions are rising globally after the introduction of new tariffs that have aggravated uncertainty in international trade.
“With the US government imposing 25% tariffs on imports from Canada and China, and an additional 10% on Chinese imports, uncertainty in the trade environment continues to expand,” Choi added.
Trump’s tariffs target key trading partners and selected industries that include chips, biopharmaceuticals, and automotives. The government of South Korea expressed willingness to take “bold and disruptive support measures” that include setting up a fund dedicated to strategic industries to secure its leadership in top-notch technology development.
