South Korea's government plans to use additional tax revenue generated by the country's artificial intelligence (AI) semiconductor boom to establish a fund for public infrastructure and future-focused projects, according to the presidential office.
AI chip boom boosts revenue
The surge in global demand for advanced memory chips used in AI data centres has driven record profits for leading chipmakers Samsung Electronics and SK hynix, contributing to stronger economic growth and significantly higher government tax revenues.
During a meeting between the government and the ruling party on Sunday, presidential chief of staff Kang Hoon-sik said the proposed "future response fund" would finance major projects centred on AI and the semiconductor sector.
"The excess tax revenue generated from the semiconductor boom at this critical moment for Korea's future should not be spent carelessly," Kang said.
He added that the fund would also be used to reduce inequality and help young people access housing, launch startups and secure employment. The government will decide how to allocate the funds at a fiscal strategy meeting later this month before seeking public feedback. Kang did not disclose the expected size of the fund.
Investment in chip infrastructure
In an interview with the Dong-A Ilbo daily published on Monday, Kang said part of the fund would be directed towards expanding infrastructure supporting semiconductor manufacturing, including electricity and water supplies.
Samsung's shares climbed more than 170% in the first half of the year, while SK hynix gained over 300%, pushing the combined market capitalisation of the two companies beyond $1 trillion.
Samsung is expected to report strong preliminary second-quarter earnings on Tuesday. Meanwhile, SK hynix plans to raise 45 trillion won ($29 billion) through a Nasdaq listing.
Last week, the two companies announced an 800 trillion won (around $520 billion) public-private investment to build a new semiconductor fabrication hub in southwestern South Korea.
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Debate over use of tax revenue
The AI-driven semiconductor boom has sparked debate over how the additional tax revenue should be utilised.
In May, presidential chief policy secretary Kim Yong-beom proposed using the excess revenue to support startups, assist young people, expand basic income programmes for rural and fishing communities, and provide support for artists.
The industry's rapid growth has also strengthened workers' demands for better wages. Samsung avoided a major strike in May after reaching an agreement with its largest labour union on employee bonuses.
