(July 6): South Korea is looking at creating an investment fund using excess tax revenue from its burgeoning semiconductor industry to finance long-term economic growth, a senior government official said.
Home to chip giants Samsung Electronics Co and SK Hynix Inc, South Korea is likely in line for a bumper corporate tax windfall. The two firms are both forecast to post record operating profits which could collectively yield more than 100 trillion won in annual corporate taxes, analyst estimates suggest. Seoul had previously estimated it would get that amount from its total 2026 corporate tax collection.
Excess tax revenue from the country’s chip industry should be invested for future growth, President Lee Jae Myung’s chief of staff, Kang Hoon-sik, said Sunday, speaking at a senior-level meeting of the government and the ruling party.
“By launching the fund with the extra tax revenue, we aim to make bold investments for the future, including supporting the three mega projects, creating future growth engines, addressing K-shaped polarisation and supporting housing, startups and jobs for those in their 20s and 30s,” Kang said.
Details of the fund — including its size or how it would be managed — were not immediately available. Any such proposal would likely require legislative approval.
South Korea last week unveiled its three mega-projects initiative, which involves significant investment in semiconductors, physical AI and data centres.
See also: Leveraged ETF goes haywire in Korea with wrong-way 40% moves
Investments of at least 1,350 trillion won from companies including Samsung and SK Hynix will be made, including new chip plants in the country’s southwest, as the government looks to strengthen the country’s long-term competitiveness and position itself as an AI powerhouse.
In an interview with the DongA Ilbo newspaper published Monday, Kang said that part of the excess tax collection may be used to expand electricity and water supply to the country’s chip plants.
“At this critical juncture which will shape South Korea’s future, the additional tax revenue generated by the semiconductor boom and other sources must not be wasted,” Kang said.
See also: Indonesia wealth fund Danantara plans dollar bond offering
South Korea has been at the forefront of global debates about how to use profits from AI.
The president’s policy chief, Kim Yong-beom, posted a Facebook essay in May suggesting the country could look at paying citizens a “dividend” using excess tax revenue from AI profits, underscoring growing pressure to redistribute gains from a boom that’s enriched local chipmakers.
Uploaded by Arion Yeow
