The South Korean government's K-On-Device AI semiconductor technology development project is facing increased concerns as its budget has been reduced by approximately 200 billion won from the initial plan, and the project timeline has been delayed by about three months.
The government has stated that it will actively support this technology development, which involves an investment of several hundred billion won, to ensure it leads to semiconductor mass production and integration into finished products.
According to the semiconductor industry on June 4, the K-On-Device AI semiconductor technology development project is set to be announced in June, with full-scale operations expected to begin in July. This is about three months later than initially planned, as the government aimed to start the project in March.
The project's budget has also been scaled back. The Ministry of Trade, Industry and Energy confirmed on June 2 that the total budget for the K-On-Device AI semiconductor technology development project has been finalized at 800.23 billion won. The government will contribute 511 billion won, while the remaining budget will come from private sector investments. This represents a reduction of about 20% from the original budget proposal of 1 trillion won.
The K-On-Device AI semiconductor technology development project will involve domestic fabless companies designing AI semiconductors based on industry needs, with production carried out by local foundries. This initiative aims to connect semiconductor demand companies with fabless firms and foundries. The project will focus on developing customized AI semiconductors for four key industries: automotive, Internet of Things (IoT) and home appliances, machinery and robotics, and defense.
Concerns have been raised that the budget cuts may undermine the project's effectiveness. On-device AI semiconductors require significant investment from design to validation and mass production, leading to fears that budget reductions could result in a scaled-back project scope and diminished support. Notably, about 30% of the total project budget is expected to be funded by demand companies. With the overall budget shrinking, there are worries that the financial burden on these companies will increase, potentially reducing their willingness to participate in the project.
Experts emphasize the necessity of follow-up support that extends beyond research and development to actual mass production and product integration. They argue that the Ministry of Trade, Industry and Energy, which is leading the project, must understand the unique characteristics of the AI semiconductor industry and reflect these in project execution. One industry representative stated, "Even if domestic fabless companies secure technological capabilities, without the adoption and mass production support from demand companies, it will be difficult to enhance industrial competitiveness. The government needs to establish specific follow-up policies that support validation, market access, and connections with demand companies after development."
In this context, Minister of Trade, Industry and Energy Kim Jeong-kwan has stated, "We will spare no effort in providing comprehensive support, including R&D, validation, mass production, financial assistance, and regulatory improvements, to ensure that the developed chips can be integrated into finished products in key industries such as automotive."
* This article has been translated by AI.
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