Semiconductor boom strains Korea's budget, power grid and Micron's U.S. expansion
South Korea unveils a 100-trillion-won fund to manage chip-boom tax windfalls, as new power demand forecasts rise sharply and Micron races to expand DRAM output.
The fund is designed to turn cyclical peaks in chip-driven tax revenue into a long-term investment vehicle. Windfall revenue would flow into the fund during good times, available to the general account when revenues fall below a 10-year trend. Idle funds could be invested for returns above government bond yields.
An editorial in The Korea Herald, however, argued that the fund's proposed uses are too broad. It cited youth cultural and sports passes, housing subsidies and rural basic income as programs that belong in the ordinary budget, where their costs and effectiveness can be assessed against competing priorities. The editorial also warned that fund rules allowing changes to major spending items within a 20-30 percent range without prior National Assembly approval could become a form of permanent supplementary budgeting.
Alongside the fund, the government announced a plan to end the 55-year-old automatic allocation of 20.79 percent of domestic taxes to local education offices, a change the editorial called "more defensible" given Korea's shifting demographics.
Debt remains a concern. The Korea Herald noted that South Korea's national debt rose by 129 trillion won last year and surpassed 1,300 trillion won. Article 53 of the National Finance Act gives priority to debt redemption when surplus tax revenue occurs, but the fund plan does not explicitly address this, the editorial said. It suggested Norway's capital-preservation approach as a better model for protecting principal while spending only sustainable returns.
On electricity, a government assessment presented at the fifth discussion meeting for the 12th Basic Plan for Electricity Supply and Demand estimates peak power demand could reach 158.4 to 165 gigawatts by 2040, about 27 gigawatts higher than a projection made four months earlier. The Korea Times said in an editorial that this is equivalent to the capacity of about 19 large 1.4-gigawatt nuclear reactors, and would be more than half again as high as the country's current all-time peak of about 104 gigawatts.
The Korea Times editorial said the sharp revision underscores the need for a more dynamic forecasting system. It argued that renewables alone cannot reliably supply power-hungry semiconductor plants and AI data centers, and that nuclear power deserves a serious place in the energy mix. Transmission investment is also critical because renewable generation is concentrated in the southwest while new demand is emerging around Seoul, including the Yongin semiconductor cluster.
In the United States, CNBC reported that about 9,000 workers in Boise, Idaho, are working long hours six days a week at two state-of-the-art fabs for Micron, aiming for full DRAM production by the first quarter of 2027. Micron is also building two more fabs in Clay, New York, with a total investment of $100 billion, including $6 billion in government support under the CHIPS and Science Act. CEO Sanjay Mehrotra said technology can offset higher U.S. production costs, and he wants to take market share from Korean competitors.
CNBC noted that the data-center trade is being held back not by demand but by other factors. Governors of Texas and Pennsylvania have taken steps to slow down data-center projects, and opposition to data centers is growing. The column said that a common code of conduct among data-center companies is needed for the United States to stay ahead.