Establishment of a 50 trillion won Advanced Strategic Industry Fund, full support for advanced industries such as semiconductors, secondary batteries, bio, AI, and robotics
The government has decided to establish a '50 trillion won Advanced Strategic Industry Fund' to enhance the competitiveness of advanced strategic industries.
This fund will support various advanced industries, including national strategic industries such as semiconductors, secondary batteries, bio, artificial intelligence (AI), and robotics, and plans to broadly support not only large companies but also medium-sized and small enterprises.
In particular, this fund will provide various forms of financial support, such as ultra-low interest loans, equity investments, and subordinated reinforcement, to actively assist companies' research and development (R&D) and expansion of production facilities. It is expected that this will further grow Korea's advanced industries.
Background for the establishment of the Advanced Strategic Industry Fund
Recently, fierce competition is underway in the global market for supremacy in advanced strategic industries. In particular, due to massive investments from China, the gap between industries is gradually narrowing, and the United States has begun to protect its domestic industries through high tariffs and protectionism.
In this context, our country also needs active financial support. The existing low-interest loan program for semiconductors has been operating at a scale of 17 trillion won over three years, but there were limitations in technological development and ultra-long-term investment.
Accordingly, the government has decided to establish the 'Advanced Strategic Industry Fund', which can comprehensively support large-scale investments, loans, and guarantees. This measure is expected to play an important role in enhancing the industrial competitiveness of our country in the future.
Main contents of the 50 trillion won Advanced Strategic Industry Fund
The government will establish a 50 trillion won Advanced Strategic Industry Fund at the Industrial Bank to enhance the competitiveness of advanced strategic industries. In addition, it plans to focus support of more than 100 trillion won in total by collaborating with the Industrial Bank and commercial banks.
The target for support includes companies belonging to the advanced strategic industry sector. It includes companies with national strategic technologies in various fields such as semiconductors, secondary batteries, displays, bio, defense, vaccines, robots, hydrogen, future cars, and AI, as well as the overall infrastructure and technology ecosystem related to them.
This program will support not only large companies but also medium-sized and small enterprises without restriction, allowing various companies to benefit.
There are several ways to support. First, ultra-low interest loans will provide funds at a low interest rate comparable to government bonds. Second, participation in the establishment of a special purpose company (SPC) for large-scale factory equipment investments will be made through equity investment. Finally, subordinated support will be provided to support ultra-long-term infrastructure projects such as electricity and water supply, inducing large-scale capital input from the Industrial Bank and commercial banks.
Funding sources and operation system of the Advanced Strategic Industry Fund
The government plans to issue government-guaranteed fund bonds and utilize the Industrial Bank's own contributions to raise fund resources. This method will be used to generate the fund.
The fund will be raised by issuing government-guaranteed bonds known as the Advanced Strategic Industry Fund Bonds. In addition, the Industrial Bank's own funds will also be utilized and additional funds will be raised through contributions.
The operation system will discuss major policy issues at the Ministerial Meeting on Strengthening Industrial Competitiveness, while individual fund support will be decided by the 'Fund Operation Review Committee' centered on private members.
Fields of utilization and expected effects of the Advanced Strategic Industry Fund
The newly established fund is expected to significantly enhance the competitiveness of advanced strategic industries such as semiconductors, secondary batteries, bio, AI, and robotics. This will be an important opportunity to strengthen the future growth engine of the Korean economy.
The areas of support and corresponding examples are as follows.
First, in the semiconductor sector, support will be provided for the establishment of large-scale semiconductor factories (Fabs) through special purpose companies (SPCs). Second, in the secondary battery sector, support will be given for R&D and expansion of production facilities to dominate the global electric vehicle battery market. Third, in the bio field, it will support long-term R&D investment and the establishment of production facilities for vaccine and new drug development. Finally, in the AI and robotics sectors, support will be provided for the development of AI-based advanced robots and innovations in smart manufacturing processes.
The expected effects of this support are diverse. The competitiveness of advanced strategic industries will be enhanced, and supremacy in the global market can be secured. In addition, comprehensive support for not only large companies but also medium and small enterprises will be provided. It will also create opportunities to solve the problem of insufficient ultra-long-term investment and increase patient capital. Furthermore, large-scale financial support will become possible through collaboration with the Industrial Bank and commercial banks.
Future schedule for implementation
In March, an amendment to the Korea Industrial Bank Act and a government guarantee agreement will be submitted to the National Assembly. Once this bill passes, fund operations will begin promptly after a minimal preparation period.
After 2025, a total of 50 trillion won Advanced Strategic Industry Fund will be operated over five years. The government will quickly advance amendments to related laws to ensure the fund can be operated soon and will implement tailored support that matches the demands of companies.
If this fund operates successfully, it is expected that South Korea will maintain its global competitiveness in core future industries such as semiconductors, secondary batteries, bio, AI, and robotics, and play an important role in continuing the ultra-gap strategy.
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