South Korea to use AI tax windfall to fund public projects

SEOUL

South Korea's government plans to use a windfall in tax income from artificial intelligence chipmakers to set up a fund for public infrastructure projects, the presidential office said.

Rising global demand for advanced memory chips used in AI data centers has helped South Korean semiconductor giants post record profits this year, boosting national economic growth.

The success of Samsung Electronics and SK hynix in particular has led to a corresponding increase in government tax revenues.

During a meeting between the government and the ruling party on July 5, presidential chief of staff Kang Hoon-sik said the "future response fund" would help finance large-scale projects centered around AI and the semiconductor industry.

It would also help to reduce inequality and support young people in accessing housing, founding startups and finding jobs, he said in comments on July 6.

"The excess tax revenue generated from the semiconductor boom at this critical moment for Korea's future should not be spent carelessly," Kang said.

He did not reveal how much money would be in the fund, but said the government would review how to use it at a fiscal strategy meeting this month before seeking public input.

Samsung's shares surged more than 170 percent and SK hynix's more than 300 percent in the first half of the year -- taking both firms' market capitalisation past $1 trillion.