South Korea to fund public works with AI revenue

South Korea announced plans to create a public works fund, to be financed by state revenues generated from the artificial intelligence (AI) sector. The announcement came from the presidential office amid soaring profits for chip manufacturers.

The global demand for memory chips, crucial for AI data centers, has enabled South Korean semiconductor giants like Samsung Electronics and SK Hynix to achieve record profits this year. The impressive stock performance of these companies, with Samsung Electronics' shares rising over 170% and SK Hynix's by more than 300% in the first half of the year, has significantly boosted South Korea's state revenues. Both companies' market capitalization has surpassed $1 trillion for the first time.

During a meeting with the government and the ruling party, Kang Han-sik, the presidential chief of staff, unveiled the concept of a "future response fund." This fund is intended to finance large-scale national projects centered on the AI and semiconductor industries. Additionally, it will be utilized to reduce inequalities and provide support for young people in areas such as housing, entrepreneurship, and employment.

Kang emphasized that surplus state revenues from the semiconductor boom should not be spent carelessly at this critical juncture for Korea's future. While the exact amount to be allocated to the fund was not specified, the government assured that it would explore avenues for utilizing these revenues during a budget planning session scheduled later this month. Kang also stated in an interview that excess state revenues from AI would be directed towards developing infrastructure dedicated to semiconductors, particularly for electricity and water supply.

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The surplus state revenues generated from the semiconductor boom, at this critical moment for Korea's future, should not be spent carelessly.