ITIF - The Information Technology and Innovation Foundation

07/08/2026 | Press release | Archived content

Korea Should Turn Its Chip Windfall Into Lasting Productive Capacity, Says ITIF

SEOUL-Following the South Korean government's proposal to channel additional semiconductor-related tax revenue into a new Future Response Fund, the Information Technology and Innovation Foundation (ITIF) released the following statement from Sejin Kim, associate director of ITIF's Center for Korean Innovation and Competitiveness:

Korea is right to consider channeling part of today's semiconductor windfall into long-term investment rather than allowing temporary revenue to become permanent spending. But the Future Response Fund will succeed only if legislation defines "additional revenue" using a transparent multiyear baseline, limits annual withdrawals, and scales back commitments when chip revenue normalizes.The fund should not become another broad subsidy pool or duplicate Korea's existing 150 trillion won National Growth Fund. Policymakers should measure its success by whether it expands the economy's productive capacity. That means helping capable firms become larger global competitors, accelerating the adoption of advanced technologies, developing specialized engineering talent, and removing policies that penalize companies for growing beyond SME thresholds.Because this revenue reflects Korea's position in the global AI supply chain, the fund should invest in areas that reinforce that advantage, including next-generation memory, advanced packaging, critical suppliers, and joint research with trusted partners. The best return on the chip boom would be more world-class Korean companies and more high-wage, high-productivity jobs.

Contact: Sydney Mack, [email protected]

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