The South Korean government said Friday it plans to establish a new strategic investment account within the state-run Korea Investment Corporation (KIC) with at least 20 trillion won, or about $14 billion, in initial funding.
The fund is expected to begin operations next year after lawmakers consider amendments to the Korea Investment Corporation Act.
According to the Ministry of Economy and Finance, the fund will focus on long-term investments in AI, data centers, infrastructure and other strategic sectors, including semiconductors, robotics, biotechnology, aerospace and energy-related projects.
The government said the move is intended to help strengthen national competitiveness and attract additional investment from global sovereign wealth funds and institutional investors.
KIC has traditionally managed overseas assets tied to South Korea’s foreign exchange reserves. The new account would give the organization a mandate to invest in domestic assets while keeping its investment decisions separate from its existing foreign reserve portfolio.
Seoul Economic Daily reported that the fund will begin with at least 20 trillion won in capital, including contributions from public financial institutions such as the Korea Development Bank, the Export-Import Bank of Korea and the Industrial Bank of Korea, along with shares received through inheritance and gift tax payments.
The government plans to submit the legal revisions to Parliament next month and aims to have the legislation approved this year.
Announcement follows sharp market swings
The announcement came after a turbulent week for South Korean equities. The benchmark Kospi index had fallen more than 17% over three trading sessions before rebounding sharply Friday, when it surged a record 18%.
Officials said the sovereign fund proposal was not created as a market stabilization measure.
“The government has been planning a new strategic fund since last year and has been coordinating and developing the plans with relevant ministries,” the Finance Ministry said, according to Bloomberg. “The plan is not related to the market stabilization plans, and it is one of the government’s major projects that has been pursued since last year.”
Investor sentiment improved Friday alongside a broader rebound in global technology stocks, with chipmakers such as Samsung Electronics and SK hynix posting strong gains.
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What this could change
If approved, the fund would give South Korea a dedicated source of long-term capital for AI infrastructure and strategic industries at a time when countries are competing aggressively to secure semiconductor capacity, computing infrastructure and advanced technology supply chains.
Unlike many government-backed investment programs that operate on fixed timelines, the proposed fund is designed to hold investments for extended periods and reinvest returns, potentially allowing the state to remain invested as companies grow.
The approach could make South Korea a more attractive partner for global AI and infrastructure investors, but it also increases the government’s exposure to sectors that remain volatile.
AI-related assets have experienced large swings in valuation this year, and the success of the fund will ultimately depend on whether long-term technology investments generate returns that justify the public capital committed to them.
Also read: Samsung Heavy Industries plans to commercialize a floating AI data center platform by 2028 as land, power, and cooling constraints reshape infrastructure planning.
