By Kyu-seok Shim and Heejin Kim
SEOUL, Aug 10 (Reuters) - South Korea will launch a 5 trillion won ($3.52 billion) semiconductor fund targeting promising chip materials, parts, equipment and fabless companies, a presidential official said, as Seoul seeks to accelerate plans for new chip manufacturing hubs across the country.
The government will also provide a further 5 trillion won in trade finance for suppliers, Presidential Chief of Staff Kang Hoon-sik told a press briefing after a meeting chaired by President Lee Jae Myung on Monday.
The measures are part of Lee's semiconductor megaproject initiative unveiled in June, under which Samsung Electronics and SK Hynix, together with suppliers and local governments, are expected to invest more than $576 billion in new chip manufacturing projects, including major fabrication facilities in the country's southwest region.
"The government will create a new semiconductor fund worth about 5 trillion won focused on promising materials, parts and equipment firms and fabless companies," Kang said.
The government would also launch a 10-year, 1 trillion won programme to support cooperation between large companies and smaller suppliers across semiconductor development, testing and production, Kang said.
The government will also seek passage of a Mega Special Zone Act at parliament within the year to speed up permits, environmental reviews and infrastructure construction, he said.
In his opening remarks before Monday's meeting, which was also attended by senior executives from Samsung Electronics and SK, Lee urged the Defence Ministry to relocate functions of a military air base in Gwangju by mid-2028 to accelerate development of a semiconductor manufacturing complex planned for the site.
The government has designated the 8.3 million-square-metre area (9.9 million square yards) as a candidate national industrial complex and plans to complete relocation and temporary dispersal of military facilities by the second half of 2028.
Kang said the government would ensure power and water supplies are available on schedule for new semiconductor projects.
For the planned chip cluster in the southwestern Gwangju-South Jeolla region, authorities plan to secure 650,000 metric tons of water daily by 2030 using recycled wastewater and supplies from nearby dams, he said.
For the Yongin semiconductor cluster, South Korea's flagship chip manufacturing project south of Seoul, Kang said the government plans to supply 14.7 gigawatts of electricity by 2041 using a combination of cogeneration facilities, LNG generation and power from other regions.
Kang said megaprojects worth over 350 trillion won in other regions of the country are scheduled to begin construction or facility expansions this year, while a further 57 trillion won of research and development projects are also due to start.
The Lee administration has made expanding semiconductor production capacity a central pillar of its industrial strategy, arguing that existing production bases around Yongin and Pyeongtaek will not be sufficient to meet demand driven by artificial intelligence.
(Reporting by Kyu-seok Shim and Heejin KimEditing by Ed Davies)