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Gov’t to tap National Growth Fund for $20B investment in AI, chips

Published: 16 Dec. 2025, 17:20

Deputy Prime Minister and Finance Minister Koo Yun-cheol, center, is seen before a meeting of the industrial competitiveness committee and growth strategy task force at the government complex in Sejong on Dec. 16. [NEWS1]

The government will tap its National Growth Fund to invest 30 trillion won ($20 billion) in advanced industries such as AI and semiconductors next year, along with a fund open to the public backed by a guarantee that the government will absorb part of potential losses to encourage individual investment.

The announcement was made on Tuesday during a meeting of an industrial competitiveness committee and growth strategy task force, presided over by Deputy Prime Minister and Finance Minister Koo Yun-cheol.

“The government will go all in on a major leap forward for the Korean economy, aiming to boost the potential growth rate next year,” Koo said. “We will focus on nurturing next-generation growth engines, investing 6 trillion won in AI alone and more than 12 trillion won in regional development.”

The National Growth Fund — a joint government-private initiative set to reach 150 trillion won over the next five years — will inject more than 30 trillion won into high-tech sectors in 2026 alone.

It will be backed by 15 trillion won in government-guaranteed bonds for strategic industries and 15 trillion won in private capital, with potential for the latter to increase depending on market interest.

In terms of allocation, 6 trillion won will be invested in AI, 4.18 trillion won in semiconductors, 3.08 trillion won in mobility sectors such as the automotive industry, 2.32 trillion won in bio and vaccine development and 1.58 trillion won in secondary batteries.

The investment methods will include 3 trillion won in equity financing, 7 trillion won in indirect investments, 10 trillion won in infrastructure investment and loans and 10 trillion won in ultralow interest loans, structured to respond to different levels of demand across industries.

Deputy Prime Minister and Finance Minister Koo Yun-cheol, far right, speaks during a meeting of the industrial competitiveness committee and growth strategy task force at the government complex in Sejong on Dec. 16. [NEWS1]

The government said investment decisions would take into account the industrial impact and regional economic growth.

For example, candidates for infrastructure-related financing include a wastewater reuse project at a semiconductor factory in Pyeongtaek, Gyeonggi, and a floating solar power initiative to support the National AI Computing Center.

The government had already received investment proposals worth 153 trillion won in more than 100 submissions by the end of November this year and is currently reviewing them.

A 600 billion won fund will also be established to allow the public to participate directly in the National Growth Fund. To enhance investment safety, the fund will be structured so that the government absorbs up to 20 percent of any losses using public finances through a subordinated loss mechanism.

The government plans to unveil detailed management guidelines in the first quarter of next year, which will include tax incentives to attract investment.

Participants applaud during a launching ceremony of the National Growth Fund at the Korean Development Bank in Yeouido, western Seoul, on Dec. 11. [YONHAP]

"We will share the fruits of growth with the people,” Koo said.

With the successive launches of policy-driven funds, such as the National Growth Fund and the Korean Sovereign Wealth Fund, concerns about overlapping investments are growing.

"If large government-backed funds absorb a significant amount of market liquidity, industries that don't benefit from these funds could experience a crowding-out effect,” said Ahn Dong-hyun, a professor of economics at Seoul National University. "To prevent overlapping investments, we need to streamline various policy funds and be more prudent in selecting investment destinations."

To avoid duplicate investments, existing funds such as the Innovation Growth Fund and the Semiconductor Ecosystem Fund will be consolidated under the National Growth Fund.

President Lee Jae Myung speaks during a meeting on AI and semiconductor industry development at the presidential office in Yongsan District, central Seoul, on Dec. 12. [JOINT PRESS CORPS]

Beginning next year, the government will also roll out its “super-innovation economy-leading project,” a strategic initiative aimed at boosting potential growth.

At Tuesday’s meeting, implementation plans were presented for four priority sectors — superconductors, biotechnology, digital health care and content. The biotech strategy includes a 150 billion won fund specializing in Phase 3 clinical trials and a one trillion won fund to support global expansion in the bio and vaccine sectors.

In addition, the government presented new plans to secure logistics and supply chains abroad. Although the importance of supply chain resilience has increased since the Covid-19 pandemic, Korea has remained vulnerable due to insufficient overseas investment and budget constraints, leading to dependence on leased port terminals.

To address this, the government will establish a one trillion won Global Terminal Investment Fund and increase the existing global logistics supply chain fund to two trillion won to support the acquisition of foreign logistics assets.

A view of Samsung Electronics’ Pyeongtaek plant in Gyeonggi, the world’s largest semiconductor plant [SAMSUNG ELECTRONICS]

As part of its carbon neutrality goals, the government will also promote the use of heat pumps, which can be used for heating, cooling and hot water supply. Because they run on electricity instead of burning fossil fuels, they are considered a key tool in decarbonization.

The government plans to recognize air-source heat pumps as renewable energy and exempt residential heat pumps from progressive electricity billing to encourage adoption. It aims to deploy 3.5 million heat pumps by 2035 and reduce greenhouse gas emissions by 5.18 million tons.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY AHN HYO-SEONG [[email protected]]