The announcement comes as South Korea tries to keep up with nations like the US, China, and Japan that are also providing significant policy support to strengthen semiconductor supply chains on their own soil. The announcement also includes a separate 1.4 trillion won fund to foster AI semiconductor firms.

The export-oriented economy of South Korea is largely dependent on semiconductors. Chip exports hit a 21-month high of $11.7 billion in March, accounting for over a fifth of all exports from Asia’s fourth-largest economy.

At a conference of legislators and executives from the chip business on Tuesday, Yoon declared, “The competition in semiconductors today is an industrial war and an all-out war between nations.”

South Korea intends to greatly increase research and development in artificial intelligence (AI) chips, such as artificial neural processing units (NPUs) and next-generation high-bandwidth memory chips, by designating investments and a fund, the government said in a statement.