S.Korea Targets Power Semiconductors as Its Next 'Second Memory' Cash Cow, Plans Over 500 Billion Won in R&D

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Article:

The Korean government is launching planning for a large-scale research and development (R&D) program for next-generation power semiconductors as part of its "Ultra-Innovation Economy Project." As demand grows for power semiconductors, which determine power efficiency across advanced industries including artificial intelligence (AI) data centers, electric vehicles, and power grids, the government is accelerating investment to build up domestic production bases and supply chains.

Koo Yun-cheol, Deputy Prime Minister and Minister of Economy and Finance, held an Emergency Economic Headquarters meeting combined with a meeting of economy-related ministers at the Government Complex Seoul on Wednesday, where he discussed the "Status and Future Plans of the Ultra-Innovation Economy Project," which included these details.

The government plans to finalize the commercialization technology roadmap for next-generation power semiconductors this month and launch large-scale R&D planning linked to demand companies. At the meeting, next-generation power semiconductors were discussed as a major project to secure future growth engines, alongside small modular reactors (SMR) and on-sensor AI.

The government's policy is to support technology development and field demonstration for next-generation power semiconductors, SMR, on-sensor AI, actuators for humanoid robots, and secondary batteries, and to begin generating substantial results from the Ultra-Innovation Economy Project from next year.

Power semiconductors are semiconductors that convert and control power. They improve the driving efficiency of electric vehicles, reduce power loss in AI data centers, and are also used to stabilize power grids amid the expansion of renewable energy. Their use is also growing in defense and aviation, eco-friendly ships, and robots.

In particular, compound-based next-generation power semiconductors such as silicon carbide (SiC) and gallium nitride (GaN) outperform conventional silicon semiconductors in high-temperature, high-voltage, and high-frequency environments, making them key components for future industries.

Power semiconductors are components whose importance grows as electricity-consuming industries expand. For AI data centers, the key is to use enormous amounts of power stably, while for electric vehicles and robots, battery efficiency translates directly into product competitiveness. As renewable energy expands, demand is also growing for technology to control power grid volatility. Analysts say power semiconductors are linked not only to the semiconductor industry but also to competitiveness in energy, mobility, and defense.

The government is accelerating the cultivation of power semiconductors because such expanding demand is directly connected to the supply chains of Korea's key industries. There are concerns that if power semiconductor competitiveness declines, the parts procurement and product competitiveness of core industries such as automobiles, batteries, shipbuilding, energy, and defense could become dependent on foreign companies.

The Ministry of Trade, Industry and Energy (MOTIE) had also previously stated, while discussing the commercialization technology roadmap for next-generation power semiconductors, that it was planning a full-cycle integrated large-scale R&D program linked to demand companies. Its plan is to support private companies' transition to mass production through upgrading the public fab at the Busan power semiconductor specialized complex and utilizing demonstration infrastructure in Pohang and Naju.

This R&D is expected to be carried out in a way that has demand companies participate from the development stage. The aim is to bundle materials, devices, modules, and system demonstration into a full cycle to reduce the gap between technology development and commercialization.

Inside and outside the government, projections suggest more than 500 billion won in state funding could be invested in the R&D project. With private matching added, the total project scale could grow to around 750 billion won. The specific scale is expected to be determined through consultations with fiscal authorities and relevant ministries during the process of drawing up next year's budget proposal after MOTIE completes its project planning.

"We will push forward structural reform and the Ultra-Innovation Economy Project in earnest to discover future growth engines such as a second and third semiconductor," Koo said.

https://en.sedaily.com/finance/2026/06/12/korea-launches-major-rd-for-next-generation-power-chips