Presidential chief of staff proposes 'future response fund' fueled by semiconductor tax windfall

The presidential chief of staff on Sunday proposed creating a "future response fund" financed by additional tax revenue from the semiconductor sector to support long-term investment.

“At this critical moment that will determine Korea’s future, additional tax revenue generated by the semiconductor boom must not be spent carelessly,” Kang Hoon-sik said, speaking during a high-level policy coordination meeting held between the Blue House, the government and the ruling Democratic Party at the prime minister's official residence in Jongno District, central Seoul, on Sunday.

He explained that the tax revenue will be used to support the government’s ambitious “three megaprojects” aimed at driving Korea’s high-tech industrial development, as well as other areas such as expanding housing, entrepreneurship and employment support for young people in their 20s and 30s.

The massive projects are joined by Korea’s leading chipmakers SK hynix and Samsung Electronics, which are set to invest some 800 trillion won ($522.9 billion) to build four new chip facilities in the country’s southwest region.

Kang stressed the importance of “establishing an AI semiconductor revolutionary ecosystem that overcomes the limits of the capital region and is tailored to each region’s industrial base and potential,” taking Silicon Valley and Texas' Texoma Semiconductor Tech Hub as models.

Kim Yong-beom, presidential chief of staff for policy, wrote in a Facebook post earlier Sunday that the government's role should evolve from regulating markets to building the infrastructure needed for production in the AI era.

“The state is no longer a market regulator,” Kim wrote, defining it as a “production platform that builds power grids, develops industrial sites and organizes supply chains.”

Kim described AI as "not simply a technological revolution but a production revolution," arguing that changing a production method not only impacts individual companies, but transforms industries, the flow of capital and labor and, ultimately, the state itself.

Kim highlighted the growing strategic importance of high-bandwidth memory (HBM) chips, saying competition in AI semiconductors is shifting away from computing speed toward memory bandwidth.

"Korean companies are currently enjoying a global competitive edge in the HBM sector,” Kim wrote. “That represents a meaningful strategic asset in the AI production system.”

However, he cautioned that the country's advantage is far from guaranteed.

"Technology evolves rapidly and supply chains are constantly being reshaped,” Kim said. “Competitive advantage is not an asset that can simply be possessed but momentum that must be continuously sustained, and that momentum cannot be created by companies alone."

He relayed that maintaining industrial competitiveness requires reliable electricity grids, industrial water supplies, factory sites and power transmission infrastructure.

Kim furthermore outlined three key governmental roles in the AI era: building production infrastructure, sustaining production capacity and ensuring the gains from productivity are broadly shared. He stressed the need to organize the entire country as a “single production platform.”

He added that attracting a broad range of human resources, including top researchers and engineers, should likewise be viewed as part of the production revolution.

Kim also argued that while AI will boost productivity, markets alone will not automatically allocate its benefits.

"Production and distribution are not in conflict," he continued. "Production is the prerequisite for distribution, and effective distribution, in turn, enables greater production. The state's role is to design that virtuous cycle."

Kim said Korea stands at a “historic turning point.”

"In the AI era, national competitiveness will be determined not by technological capability alone, but by the ability to organize a production system,” he said.

On Monday, President Lee Jae Myung is set to hold a meeting at the Blue House to personally review the progress of the southwestern semiconductor cluster project. The meeting is expected to be attended by the likes of Kang, Kim, Deputy Prime Minister and Finance Minister Koo Yun-cheol, Industry Minister Kim Jung-kwan and Land Minister Kim Yun-duk.

It is the first formal review of the strategy since the government unveiled its ambitious plans for the megaprojects, also underscoring Lee’s commitment to closely overseeing their implementation.

BY SHIN MIN-HEE [[email protected]]