The Fruits of the Semiconductor Boom Must Be Preserved as National Wealth for Future Generations

Tax revenue is rising sharply thanks to the semiconductor boom. As semiconductor companies’ earnings improve amid the spread of artificial intelligence (AI) and growing demand for high-bandwidth memory (HBM), corporate tax revenue is also increasing. The government projected that national tax revenue this year would reach a record high of 478.6 trillion won and that it would collect 63.2 trillion won more than had been expected when the supplementary budget was drafted. However, if the industrial economy slows, the current rise in tax revenue will be difficult to sustain. The time has come to decide whether temporarily increased tax revenue should be used for immediate spending or preserved as an asset for future generations.

Countries differ in how they use the fiscal room secured during boom periods. Norway has accumulated oil revenue in a sovereign wealth fund and invested it in overseas financial assets, converting it into a long-term national asset. It has managed fiscal spending based on the fund’s expected long-term real rate of return, reducing its dependence on resource income. Taiwan, by contrast, has used higher tax revenue from the semiconductor boom and other factors to manage national debt. From 2021 to 2023, it reduced new borrowing and repaid existing debt using tax revenue collected above budget projections.

Korea, too, should use increased tax revenue from a long-term perspective. Reducing national debt is also a way to prepare for the future, but it is different in nature from long-term investment for future generations. Funds used for immediate fiscal programs are exhausted as they are spent, but funds used for long-term investment can remain as assets in the future depending on investment performance. If the choice is to invest for future generations, the focus should be on steadily accumulating assets rather than on temporary fiscal spending.

Assets for future generations should be managed separately from the government’s short-term fiscal spending through an independent sovereign wealth fund account. In the general budget, the scale and purpose of spending can change each year according to policy needs. A sovereign wealth fund, by contrast, should manage accumulated funds in a separate investment account and prevent the government from withdrawing them arbitrarily in response to short-term fiscal needs. It needs the kind of independence that allows it to maintain a long-term management objective, as with the National Pension Service.

A sovereign wealth fund should pursue long-term returns through diversified overseas investment. If resources secured during the semiconductor boom are concentrated in specific domestic industries, the risks associated with changes in the industrial cycle could grow. Risk concentration should be reduced by diversifying across overseas stocks, bonds, and alternative assets, while also taking advantage of growth opportunities in global markets. What matters is investing with long-term profitability and risk management in mind rather than short-term performance.

The long-term performance of a sovereign wealth fund depends on professionalism and operational independence. Singapore’s sovereign wealth fund, GIC, has the government set long-term investment objectives and risk management standards while leaving individual investment decisions to a professional management organization. Korea, too, should have a professional management organization invest based on returns and risk rather than having the government directly select specific industries or companies. Professional investment decisions, not political judgments, should underpin long-term performance.

The fiscal room secured through the semiconductor boom should be preserved as an asset for future generations. What matters is not spending temporarily increased tax revenue on immediate outlays, but accumulating and managing it over the long term through an independent sovereign wealth fund. Norway accumulated oil revenue as an asset for the future, while Taiwan used increased tax revenue from the semiconductor boom to manage national debt. Korea, too, should preserve its current fiscal room as national wealth to be passed on to future generations. The semiconductor boom will end someday, but whether its gains can be passed on to future generations depends on the choices made today.

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Original title: 반도체 호황의 결실, 미래세대의 국부로 남겨야

Author: Hyun-jo Choi

Date: 2026-11-02

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=press&pn=1&idx=29707