Korea turns AI and chips into ministries and contracts

South Korea has stopped treating artificial intelligence and semiconductors as one industry among many and started organising its government around them. On Oct. 13, a cabinet meeting approved a revision to the Industrial Ministry's internal rules creating a bureau-level Semiconductor Innovation and Growth Support Team, with three divisions covering policy, advanced chips and the supplier ecosystem, plus 20 staff. The same ordinance created an India Trade Cooperation Division.

The support team exists because the Semiconductor Industry Competitiveness and Support Act has begun generating statutory work: a basic plan, a competitiveness committee, and the designation of clusters. Minister Kim Jung-kwan framed the industry as the supply chain behind AI, cars and appliances, and about 50 percent of Korean exports. The bureau is to be in place on Oct. 20, according to the Ministry of the Interior and Safety.

The laws that govern data moved the same day. Revisions to the AI Framework Act and the Data Industry Act passed the cabinet, obliging government projects to link the AI training data they produce into the AI Hub, and requiring public institutions to cooperate with the One-Window data catalogue unless they have specific grounds not to. Both take effect six months after promulgation, in April 2027. "To raise AI competitiveness you need high-quality training data, and a base that lets people find and use the data they need," said Um Yeol, the ministry's AI policy chief.

Also in Seoul that week, Deputy Prime Minister Bae Kyung-hoon met the Physical AI Alliance, a body relaunched in June with technology, industrial-bridge and governance committees, and told it the technology was one of three mega-projects alongside semiconductors and AI data centres. "Whoever makes technology that works on industrial sites first and spreads it will matter," he said. Separately, the Foreign Ministry convened the sixth Quantum Development Group meeting with 13 countries, where Korea sits as a co-lead on investment with Britain and Denmark.

The money is already moving into the ground. Daewoo Engineering & Construction won the first package of the Yongin semiconductor cluster for 413 billion won ($309 million), a 48 percent share of a consortium that includes Namkwang Engineering & Construction at 40 percent. Namkwang's own 344 billion won ($258 million) share equals 96.3 percent of its last reported revenue. LH president Lee Sung-hoon said the site would be completed early.

Suppliers to AI data centres signed contracts too. LS Electric is supplying switchgear and distribution transformers to Bloom Energy for a Pennsylvania fuel-cell project for 185 billion won ($139 million), its cumulative Bloom orders passing $500 million in about 18 months. Seo Jin System won 106 billion won ($79.7 million) of solid-oxide fuel-cell modules and parts from Bloom. LS Materials contracted 68.9 billion won ($51.6 million) of ultracapacitors for AI data-centre fuel cells with iConnexion Asia.

What remains is whether the demand holds.