South Korea launches €3 billion chip fund

South Korea is launching a semiconductor fund worth 5 trillion won, equivalent to approximately €3 billion. The money will go to companies active in chip materials, components and equipment, or engaged in chip design.

The fund is part of a broader package of government measures with which Seoul aims to strengthen the national chip industry. In addition to the fund, the government is making a further 5 trillion won in trade financing available to suppliers in semiconductor supply chains.

The announcement follows a series of major investment plans the country has presented in recent months, aimed at maintaining and expanding its position in the global chip market.

What the fund aims to finance

The semiconductor fund focuses specifically on companies working on materials, components and production equipment for chips, and on manufacturers that design chips. The emphasis is therefore on the supply chain surrounding major chip producers such as Samsung Electronics and SK Hynix, rather than on those large players themselves.

Running alongside the fund is a ten-year programme worth 1 trillion won, just over €610 million, that encourages collaboration between large companies and smaller suppliers. The programme supports joint trajectories in the development, testing and production of semiconductors. The rationale behind this measure is that smaller suppliers will gain earlier access to the production environments and expertise of the major chip companies.

Part of a larger investment plan

The fund does not stand alone. In June, South Korea announced a mega-project in which Samsung Electronics, SK Hynix, suppliers and regional governments would jointly invest more than $576 billion in new chip production projects. This figure represents an expected total; final commitments from the parties involved have not been published separately.

Other sources cite even broader objectives: an investment package of $35 billion specifically for the semiconductor industry, and a long-term ambition of $534 billion, equivalent to 700 trillion won, to secure a leading role in the AI semiconductor market. Figures of up to $650 billion for combined investments in AI, chips and robotics are also in circulation. The interrelationship between these amounts and the exact time horizon for each programme cannot be fully reconstructed from available sources.

Background and geopolitical context

Through Samsung and SK Hynix, South Korea is one of the world's largest producers of memory chips. The sector is, however, under pressure from growing competition from China, US export restrictions on advanced chip technology, and a market shift towards AI-specific chips such as high-bandwidth memory.

US trade restrictions on chip equipment and materials destined for China have placed global supply chains under strain. South Korea is using funds and collaboration programmes of this kind to reduce the vulnerability of its own suppliers and to further develop technological capabilities, without becoming dependent on a single end market or a single technology supplier.

Several countries and trade blocs are running comparable programmes. The European Chips Act makes €43 billion available to increase Europe's share of global chip production, while the US CHIPS and Science Act reserved $52 billion for domestic chip production and research.

What this means for the Dutch and European chip sector

For the Dutch and European chip industry, the South Korean announcement is relevant for a practical reason: a large share of the equipment used by South Korean chip factories comes from the Netherlands. ASML in Eindhoven is the world's sole producer of EUV lithography machines, and Samsung and SK Hynix are among its largest customers.

Greater investment in the South Korean chip supply chain in principle also means more demand for advanced lithography equipment and its associated components. At the same time, Dutch suppliers operate in a geopolitically charged environment, where export licences and international trade policy partly determine revenue opportunities. The South Korean fund increases the willingness of customers to invest, but whether this translates directly into new orders depends on factors such as capacity planning, technology generation and broader demand for chips in the AI market.

For European policymakers seeking to strengthen their own chip position, the South Korean approach illustrates how public money can be directed at the supply chain, alongside production itself. That is precisely the debate taking place in Brussels about the effectiveness of the Chips Act and the question of which links in the chain most deserve public support.