South Korea Announces Major Infrastructure and Cost Support for Semiconductor Industry

The South Korean government has announced a series of measures to accelerate the development of semiconductor clusters, including a plan to cover up to 100 percent of the costs for power, water, and other essential infrastructure. According to the Ministry of Trade, Industry and Energy, the government will focus on expediting administrative procedures for three megaprojects involving semiconductors, physical artificial intelligence, and AI data centers during the second half of the year. These initiatives include a major chip hub in Yongin and a project in Gwangju, with the government aiming to complete the selection of developers and candidate sites for a southwestern regional complex by the end of this year.

Under new enforcement rules approved by the Cabinet, the central and local governments may shoulder between 50 percent and 100 percent of the total cost for building and operating infrastructure. This framework is designed to ease the financial burden on chipmakers such as Samsung Electronics Co. and SK hynix Inc. who have pledged trillions of won in investments. To further support regional development and reduce concentration in the Seoul metropolitan area, the government will prioritize projects outside the capital region. Additionally, the Ministry of Climate, Energy and Environment plans to overhaul industrial electricity pricing to reflect regional differences, which would lower costs for energy intensive industries located outside the capital.

A presidential semiconductor competitiveness committee, chaired by the president and including Cabinet level officials and industry experts, will oversee these policies. The government also indicated it is considering joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership to diversify export markets and strengthen supply chains.