South Korea Plans to Establish "Future Response Fund" Using Chip Tax Revenue to Support Youth and AI Investment, with a Potential Scale Exceeding 100 Trillion Won

(1) South Korea's Ministry of Budget announced plans to establish a “Future Response Fund”, using excess tax revenue generated from the semiconductor industry boom to support the younger generation and invest in future growth sectors such as artificial intelligence. The funding will come from tax revenues exceeding the baseline level calculated based on the ten-year average growth rate, accumulated in strong revenue years to offset the impact during weaker periods. (2) The main uses of the fund include youth employment, housing, asset accumulation, marriage and childbirth support programs, as well as investments in AI, regional development, and talent cultivation. The South Korean government has not disclosed official size estimates, but local media report that, based on next year’s tax revenue forecasts and other sources, the fund could exceed 100 trillion won (approximately $72.28 billion). (3) This move comes as the AI boom drives surging demand for chips, with Samsung Electronics and SK Hynix seeing profits soar, while South Korea faces low fertility rates, housing pressures, and labor market challenges—youth unemployment rose to 6.8% in July, and President Lee Jae-myung has warned that the proliferation of AI could further undermine employment prospects for young workers. The related legislation will be submitted to the National Assembly next month along with the 2027 budget plan.