South Korea is escalating its semiconductor industry support strategy. On Monday, President Yoon Suk Yeol's Chief of Staff, Kang Hun-sik, announced the creation of a new 5 trillion won (approximately $3.52 billion) semiconductor fund. This fund will focus on investing in promising chip materials, components, and fabless semiconductor companies.
Unlike previous initiatives that primarily expanded wafer fabrication capacity, this fund targets vulnerabilities within the Korean semiconductor ecosystem. While South Korea dominates the global memory chip market, it remains heavily reliant on overseas suppliers for specific materials, equipment, and chip design. The government aims to use this financial backing to cultivate domestic firms and enhance supply chain self-sufficiency. Beyond the semiconductor fund, the government will also provide 5 trillion won in trade financing to support export-oriented chip suppliers, bringing total support to 10 trillion won. Seoul is also pushing for the passage of the "Mega Special Industrial Park Act" to streamline permitting, environmental assessments, and infrastructure development for large-scale semiconductor projects.
President Yoon Demands Military Land for Chip Complex
Alongside improving the supply chain, the government is advancing regional semiconductor cluster construction. On the same Monday, President Yoon Suk Yeol called for accelerated progress on the "Honam Semiconductor" project. He instructed the Ministry of National Defense to temporarily relocate the military functions of the Gwangju military airport to other bases by mid-2028, freeing up the land for the semiconductor industrial park. The Honam region encompasses North and South Jeolla Provinces and the metropolitan city of Gwangju in southwestern Korea. The Honam project, planned for the current military airport site and surrounding area, is expected to involve 800 trillion won in investment and is a key component of South Korea's ambition to build a second major semiconductor production hub.
During a meeting at the presidential office, President Yoon stated that the nation "cannot just run a speed race; we need to execute a blitzkrieg." He urged ministries to treat the next year as a "golden period" for the project, swiftly completing land, infrastructure, and regulatory preparations. The government plans to establish Honam as the country's second-largest semiconductor production belt, while developing the Chungcheong region for advanced packaging, the Gyeongsang region for physics-based AI, and constructing large-scale AI data centers outside the capital area.
Land, Power, and Water Emerge as Critical Factors for Cluster
The relocation of the Gwangju military airport is a crucial step for the Honam project, though not the sole policy focus. President Yoon expressed a desire for the Honam semiconductor project to match the construction speed of a wafer fab in Kumamoto, Japan. He noted that while semiconductor fabs typically require three to five years to build, TSMC's plant in Kumamoto took only 22 months from groundbreaking to completion. To shorten the timeline, Yoon asked the defense ministry to expedite the airport's function transfer and suggested that construction on surrounding land should begin even before the temporary relocation is complete. The Gwangju military airport holds strategic significance as one of five "Combined Operations Bases" (COB) in South Korea, capable of hosting U.S. Air Force assets during contingencies on the Korean Peninsula. It also shares a runway with the civilian Gwangju Airport, making land development a complex issue involving military, security, and civil aviation coordination.
Beyond land, the government is proactively planning the energy and water resources required for the semiconductor cluster. Under the plan, the Honam semiconductor project will secure a water supply of 650,000 tons by 2030. The Yongin semiconductor cluster, meanwhile, plans to secure 14.7 GW of planned power supply by 2041 to meet future wafer fab expansion needs. President Yoon emphasized that semiconductor projects must ensure stable power and water supplies, calling for continued communication between the government and the National Assembly to expedite relevant legislation. The government has pledged to provide comprehensive infrastructure support for power, water, transportation, and housing for these projects. Major investors, including representatives from Samsung Electronics and SK hynix, participated in the relevant meetings.
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