South Korea has approved a new 20 trillion won (US$13.9 billion) investment account within its sovereign wealth fund targeting artificial intelligence, data centers, semiconductors, and other strategic industries1,2,4. The account, announced on July 31, will be housed inside the Korea Investment Corporation (KIC) and — for the first time in the fund's history — will be permitted to invest in domestic South Korean assets3,7.
The government said the account will start with a minimum of 20 trillion won, funded through equity contributions from public institutions including policy banks. According to one source, the initial capital will be raised through approximately 16 trillion won in government-held shares contributed in kind and roughly 4 trillion won in shares received as inheritance and gift tax payments, with initial cash resources limited to around 600 billion won from stock dividends5.
The new account will be strictly separated from KIC's existing foreign exchange reserve portfolio, which managed US$232 billion in assets at the end of 2025. Management of the account will maintain full independence in its investment decisions.
The fund is structured for direct equity investments with no maturity and the possibility of management participation, modeled after Singapore's Temasek. Target sectors include AI, robotics, semiconductors, defense, bio, energy, materials, aerospace, quantum technology, data centers, energy infrastructure, and overseas supply chain companies. The government said the structure is intended to support strategically important industries while generating long-term returns for future generations and strengthening national economic security.
The government plans to submit a revision of the Korea Investment Corporation Act to the National Assembly in August, aiming for parliamentary approval within the year. Fund operations are expected to begin in 2027.
The government said the account is designed to serve as an anchor investor, attracting co-investment from overseas sovereign wealth funds and asset managers. The decision is driven by the need to "act proactively" on growing global investment interest in Korea, fueled by the nation's competitiveness in building an AI ecosystem6.
The Finance Ministry said the government has been planning the fund since last year and coordinating with relevant ministries, stating that "the plan is not related to the market stabilization plans". The announcement nonetheless arrived after the nation's equity market suffered a sharp rout this week, with the Kospi index having fallen more than 17% over three sessions on concerns over rising debt levels and doubts about massive capital expenditure by chipmakers underpinning the AI sector. The Kospi surged a record 18% on July 31, rebounding from those losses.
Separately, a much larger National Growth Fund of 150 trillion won over five years is also being prepared to finance AI and semiconductor industries.
ANALYSIS The structural decision to allow KIC to deploy capital domestically for the first time represents a significant expansion of the fund's mandate, converting it from a purely outward-facing foreign-reserve manager into a vehicle for directing state capital toward domestic strategic technology sectors. The timing — amid a severe equity selloff concentrated in technology stocks — raises questions about whether the fund will also function as a market-stabilization mechanism, despite the government's explicit denial of that link.