[2026 Growth Strategy] 4.2 Trillion Won Invested in K-Semiconductor National Growth Fund...New Strategic Export Fund for Defense and Nuclear Power

Establishment of the Semiconductor Industry Competitiveness Enhancement Committee
Expansion of Semiconductor-Focused Graduate Schools from 6 to 10
Announcement of the Introduction of the Domestic Production Promotion Tax System in July

The government will provide support for the National Growth Fund worth 4.2 trillion won to achieve its goal of making Korea one of the world’s top two semiconductor powerhouses. The plan is to elevate Korea’s semiconductor competitiveness beyond its current dominance in memory chips, expanding into all areas including system semiconductors, packaging, materials, components, equipment, talent development, and regional ecosystems.

On January 9, the Ministry of Economy and Finance announced the “2026 Economic Growth Strategy,” which includes these initiatives. The government aims to foster “semiconductors plus alpha” strategic industries as a driving force to rebound the country’s potential growth rate. In the era of artificial intelligence (AI) and global competition for technological supremacy, the government will establish a super-large semiconductor cluster and expand the fabless (semiconductor design) industry to ten times its current scale, thereby restructuring the entire ecosystem.

A “Special Committee for Strengthening Semiconductor Industry Competitiveness” under the President will be formed to establish a basic plan for enhancing the competitiveness of the semiconductor industry over the next five years (2027-2031) by the fourth quarter. Chaired by the President and composed of around 20 expert members, this committee will deliberate and decide on key policies for the semiconductor industry.

The government will also provide comprehensive support, including financial and fiscal measures. To accelerate the development of the semiconductor mega cluster and related infrastructure, a permit timeout system will be implemented. Under this system, permits will be automatically approved if not processed within a maximum of 60 days after application. Recognizing that “speed” is the key to the competitiveness of semiconductor clusters, the government aims to facilitate swift processing. The number of semiconductor-specialized graduate schools will be increased from the current six to ten by 2030 to nurture specialized talent.

Alongside semiconductors, the government will also foster the defense and bio sectors as strategic industries. With the goal of becoming one of the world’s top four defense exporters, the government will expand cooperation channels with multilateral organizations such as the North Atlantic Treaty Organization (NATO) and the European Union (EU). To strengthen new drug development in the bioindustry, the government will increase the number of medical product reviewers and shorten the approval period for new drugs from the current 420 days to 240 days.

Yongin Semiconductor Cluster Aerial View

"Government to Support Export Companies"... Establishment of Strategic Export Finance Fund

In sectors where competition for international contracts is intensifying, such as defense and nuclear power, the government will support large-scale projects. In the first half of this year, a Strategic Export Finance Fund (tentative name) will be established to invest in domestic small and medium-sized enterprises and mid-sized companies, thereby fostering the industrial ecosystem. Funding sources for the fund will include government contributions and guarantees, contributions from policy financial institutions, beneficiary company contributions, and government-paid technology fees. The fund will focus on research areas with a strong connection to exports, investing equity in relevant companies or joint ventures involving large, medium, and small enterprises.

A Strategic Economic Cooperation Task Force (tentative name) will also be launched. This task force will support the entire cycle of large-scale strategic economic cooperation projects, from design and proposal to implementation. It will also identify specialized overseas entry opportunities by country. To help domestic companies enter overseas procurement markets, the number of companies eligible for specialized vouchers will be increased from the current 40 to 90, and the support amount will be raised from 30 million won to 40 million won.

Korean Version of the Inflation Reduction Act (IRA): Introduction of Domestic Production Promotion Tax System

The so-called “Korean version of the Inflation Reduction Act (IRA),” known as the Domestic Production Promotion Tax System, will be introduced. This was one of President Lee Jaemyung’s key campaign pledges and is a system that applies production tax credits to major industries. The aim is to encourage domestic production and create a virtuous cycle of stimulating consumption and generating jobs.

For example, in the United States, production tax credits are provided for sectors such as secondary batteries, solar cells, and wind turbine blades, while Japan offers credits for electric vehicles, semiconductors, green steel, and green chemicals.

Although the government has not yet specified the eligible industries or methods, it plans to announce details in July after comprehensively reviewing the effectiveness, fairness, fiscal conditions, and measures to prevent “cherry picking” (selective benefit-taking) of the Domestic Production Promotion Tax System.

Strengthening Supply Chain Stabilization Response System

A new Economic Security Review Meeting chaired by the President will be established to build a response system for supply chain stabilization. To promote supply chain independence and diversification, investment subsidies for materials, components, and equipment in advanced strategic industries for small and medium-sized enterprises and mid-sized companies will be increased from 70 billion won to 100 billion won, and production subsidies for high-risk economic security items will be raised from 14.6 billion won to 29.1 billion won. For items that are difficult or insufficient to produce domestically, the government will provide comprehensive support, including identifying alternative sources, conducting performance tests, and facilitating domestic introduction.

To diversify funding sources, the current method of raising funds through supply chain fund bonds will be improved to allow contributions from the Export-Import Bank of Korea and the private sector. In addition, a special investment limit of 100 billion won will be established, further expanding investments in the Supply Chain Stabilization Fund.