South Korea's semiconductor boom spreads tax revenue dividends, plans to establish a fund exceeding 100 trillion won to support youth and AI investments

According to information from Zhihong Finance APP, South Korea’s Budget Ministry announced on Friday that South Korea plans to establish a new fund to use tax revenues generated by the country’s semiconductor boom to support the younger generation and invest in future growth industries such as artificial intelligence. According to a ministry press release, the proposed “Future Response Fund” will provide funding for projects aimed at helping young people find jobs, purchase homes, and start families. It will also support investments in artificial intelligence, regional development, and talent cultivation.

The funding for this fund will mainly come from tax revenues that exceed a certain benchmark, which is calculated based on the average growth rate of domestic tax revenues over the past ten years. The ministry stated that in years of robust economic growth, this will accumulate surplus tax revenues, which can later be used to alleviate fiscal pressure during economic downturns.

With the rapid development of artificial intelligence, demand for chips has surged, leading to soaring profits for South Korean chip manufacturers such as Samsung Electronics and SK Hynix.

The South Korean government has not provided an official estimate of the fund’s size. Korean media report that, based on the government's tax revenue forecasts for next year and expected inflows from other sources, the fund could exceed 100 trillion won (72.28 billion USD).

According to the plan, youth programs will support employment, housing, asset accumulation, marriage, and childbirth, while investments in growth industries will focus on artificial intelligence and other strategic technologies. Government data show that in July, the youth unemployment rate rose to 6.8%, and Lee Jae-myung recently warned that the proliferation of artificial intelligence could further impact young workers’ job prospects.

President Lee Jae-myung has pledged to create more opportunities for young people as South Korea faces low birth rates, housing affordability issues, and labor market challenges.

The fund is also related to education funding reform, which will direct more resources towards talent cultivation, higher education, and lifelong learning. The government plans to submit the relevant legislation to the National Assembly together with the 2027 budget proposal next month.