TLDR
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South Korea launches a 20 trillion won fund for AI, chips and robotics growth
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KIC gains authority to invest in domestic strategic industries starting in 2027
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State-held bank shares will provide most of the new fund’s starting capital
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The fund will target AI, semiconductors, defense, robotics and biotechnology
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Officials expect the vehicle to draw more foreign capital into Korean technology
South Korea will launch a 20 trillion won investment account for artificial intelligence, chips, robotics, defense, and biotechnology. The government will place the account inside the Korea Investment Corporation and permit domestic investments for the first time. Officials want the fund to strengthen economic security, attract foreign capital, and support strategic companies over several decades.
KIC Mandate Expands Into Domestic Markets
South Korea plans to provide about 16 trillion won through shares in major state-run financial institutions. These institutions include Korea Development Bank, Export-Import Bank of Korea, and Industrial Bank of Korea. The state will add about 4 trillion won using shares transferred through inheritance and gift tax payments.
Other funding could come from semiconductor tax surpluses, private donations, and additional public sources. Unlike existing policy funds, the account will have no fixed maturity or planned liquidation date. Managers can finance projects that require stable capital across several business cycles.
The account will buy equity directly and exercise voting rights in selected domestic companies. South Korea will also use the vehicle to support governance and protect important technologies from hostile takeover attempts. Meanwhile, KIC will keep the account separate from its foreign reserve investment portfolio.
Fund Targets AI Chips Robotics and Defense
South Korea wants the account to finance industries that support national competitiveness and industrial resilience. Priority areas include AI infrastructure, semiconductors, data centers, robotics, defense and biotechnology. The government expects the fund to identify promising local companies before they seek larger financing rounds.
Officials believe a domestic anchor can attract sovereign wealth funds, pension funds, and global asset managers. Foreign institutions have sought Korean partners that can screen projects and manage local market risks. The account could connect public capital with overseas funding for major technology projects.
The fund will take an active ownership role instead of acting as a passive financing vehicle. KIC managers will review each investment, while the government will set broad strategic priorities. South Korea says this model will preserve professional control while supporting wider national policy goals.
Legislation Sets Course for 2027 Launch
The government plans to submit amendments to the Korea Investment Corporation Act in August. The National Assembly must approve the changes before KIC can begin domestic strategic investments. South Korea aims to start fund operations in 2027 after completing the legislative process.
KIC managed about $232 billion in assets at the end of 2025. South Korea created the fund to manage public money and support the country’s foreign reserve program. However, its original mandate focused mainly on overseas assets and foreign currency returns.
The plan follows a 34% July decline in the Kospi and heavy losses among major semiconductor companies. South Korea also plans a separate 200 trillion won National Growth Fund for AI and advanced industries. Together, both initiatives could expand long-term funding and strengthen the country’s position in global technology markets.
