South Korea to Establish KRW 5tn Semiconductor Fund, Focusing on Materials, Components, and Fabless CompaniesOn August 10, Kang Hoon-sik, chief of South Korea’s presidential secretariat, said the country will establish a KRW 5tn (approximately USD 3.52bn) dedicated semiconductor fund, focusing on investments in promising chip materials, components, and fabless companies. The initiative forms part of the government’s plan to develop semiconductor industry clusters. In addition to the semiconductor fund, Kang announced that the government will provide KRW 5tn in trade financing to support export-oriented suppliers. The government will also seek to pass the Special Act on Mega-Scale Special Industrial Complexes within the year to accelerate permitting and approvals, environmental assessments, and infrastructure development in relevant areas.
According to media reports, the U.S. Federal Communications Commission (FCC) is drafting an internal regulatory proposal that would restrict imports of next-generation high-speed data center optical transceiver modules manufactured in China. The proposed restrictions are reportedly focused on new products such as 1.6T and 3.2T optical modules for AI compute clusters, while mature 800G products that have already received certification would temporarily remain unaffected. The draft has not yet been formally released and could still be revised, scaled back, or even shelved, as geopolitical technology competition continues to spread from chip manufacturing into optical communications infrastructure. Chinese optical module manufacturers, including Zhongji Innolight, Eoptolink Technology, Accelink Technologies, and HG Genuine, collectively account for nearly two-thirds of global optical module supply and approximately 60% of global optical datacom transceiver revenue. Zhongji Innolight leads the global data center optical transceiver market with a revenue share of approximately 27%, while Eoptolink Technology ranks third. If the proposed restrictions are fully implemented, Western suppliers may lack sufficient cleanroom capacity, automated packaging infrastructure, and manufacturing yields at scale to replace Chinese production in the short term. This could delay the commercial rollout of 800G/1.6T AI clusters by several quarters and push up bill-of-materials (BOM) costs for hyperscale data centers. At the same time, more than 90% of Chinese module manufacturers’ revenue from high-value 800G and 1.6T products comes from overseas buyers, meaning such restrictions would directly hit their core revenue base. To mitigate trade risks, manufacturers including Zhongji Innolight and Eoptolink Technology have already established high-capacity automated production lines in Thailand and are actively expanding their manufacturing footprint outside mainland China.
On July 28, according to Yonhap News Agency, South Korea’s Ministry of Science and ICT signed a memorandum of understanding with AMD on cooperation in the AI chip ecosystem. The two sides will establish an AI research center in South Korea, known as the “AI Center of Excellence,” with the aim of building an open AI infrastructure ecosystem. The two sides plan to develop heterogeneous AI computing infrastructure by connecting AMD’s CPUs and GPUs with AI chips, or NPUs, from South Korean companies that have strengths in inference. The cooperation will cover areas including memory, networking, servers, and software. The center will provide support for South Korean companies, universities, and research institutions in areas such as technical cooperation, AI chip software development, computing technology validation, and joint research. It will also promote collaboration with local South Korean AI chip companies.
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