South Korea plans chip windfall fund to back youth, AI investment

SEOUL, Aug 21 (Reuters) - South Korea ‌plans to ​create a ​new fund to channel tax windfalls from the country's semiconductor boom into supporting younger generations and invest in future growth ‌industries such as artificial intelligence, the budget ministry said on Friday.

The ⁠proposed "Future Response Fund" would finance programmes aimed at helping young people find jobs, buy homes ‌and start families, while also ‌supporting investments in AI, regional development and talent development, according to a ministry press release.

The fund would be financed mainly by tax revenue exceeding ​a benchmark based on the average growth in domestic tax receipts over the past decade.

It would accumulate excess tax revenue in strong years ⁠that could later be used to help cushion periods of weaker revenue, according to the ministry.

South Korean ​chipmakers Samsung Electronics and SK Hynix have seen their earnings soar as the AI boom creates insatiable demand for chips.

The ​government did not provide an official estimate of ‌the fund's size. South Korean media said it could exceed 100 trillion won ($72.28 billion) based on government projections for ⁠next year's tax revenue and expected inflows from other sources.

Under the plan, youth programmes would support employment, housing, asset building, marriage and childbirth, while investment in growth industries ⁠would focus on AI and other strategic technologies.

President Lee Jae Myung has pledged to expand ​opportunities for young people as the country grapples with low birth rates, housing affordability concerns and labour market challenges.

Government data showed the youth unemployment rate rose to 6.8% in ‌July, while Lee recently warned that the spread of AI could further cloud job prospects for younger workers.

The fund ‌is also tied to an overhaul of education funding that would redirect more ⁠resources toward talent development, higher ‌education and lifelong learning.

The government ​plans to submit related legislation to parliament alongside its 2027 budget proposal next month.

($1 = 1,383.5000 won)

(Reporting by Kyu-seok ShimEditing by ‌Ed Davies)

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