South Korea is set to channel the tax windfall from its semiconductor boom into a newly proposed fund aimed at supporting the younger generation and fueling investments in future growth sectors like artificial intelligence, according to an announcement from the country's budget ministry on Friday.

The proposed "Future Response Fund" will finance programs designed to help young people secure employment, purchase homes, and start families, while also backing investments in AI, regional development, and talent cultivation. The fund's capital will primarily derive from tax revenues that exceed a baseline calculated using the average growth rate of domestic tax income over the past decade.

During periods of robust economic performance, this mechanism will accumulate surplus tax revenue, which can then be deployed to alleviate fiscal strain during economic downturns. The initiative comes as demand for chips surges amid the AI boom, driving earnings for Korean semiconductor giants like Samsung Electronics and SK Hynix to new heights.

The government has not provided an official estimate for the fund's size. However, local media reports suggest that based on the government's tax revenue projections for the coming year and other anticipated inflows, the fund could surpass 100 trillion won ($72.28 billion). Under the plan, youth-focused programs will support employment, housing, asset accumulation, marriage, and childbirth, while investments in growth industries will prioritize AI and other strategic technologies.

Government data shows the youth unemployment rate climbed to 6.8% in July, and President Lee Jae-myung has recently cautioned that AI adoption could further impact employment prospects for young workers. President Lee has pledged to create more opportunities for young people as the nation grapples with low birth rates, housing affordability issues, and labor market challenges.

The fund is also linked to reforms in education spending, which will redirect more resources toward talent development, higher education, and lifelong learning. The government plans to submit the relevant legislation to parliament next month alongside the 2027 budget proposal.