Government hints at easing investment restrictions in key tech sectors like AI and semiconductors

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Government hints at easing investment restrictions in key tech sectors like AI and semiconductors

Published: 11 Dec. 2025, 14:44

Audio report: written by reporters, read by AI

President Lee Jae Myung speaks during a meeting on AI and semiconductor industry development at the presidential office in Yongsan, central Seoul on Dec. 12. [JOINT PRESS CORPS]

President Lee Jae Myung on Wednesday said the government has “prepared substantial practical measures that do not undermine the separation of industrial and financial capital,” indicating that regulations hindering investment in advanced industries may soon be eased.

The comment marks growing momentum for deregulation in response to intensifying global competition in sectors like AI and semiconductors. Business leaders argue that such moves are essential to national competitiveness.

AI fuels push for deregulation

One key proposal under discussion is reducing the required ownership stake for second-tier subsidiaries — so-called “grandchild companies” — from 100 percent to 50 percent under Korea’s Fair Trade Act.

Under Article 18 of the act, a subsidiary of a holding company must fully fund any acquisition or creation of a new subsidiary on its own. This has effectively restricted growth for second-tier subsidiaries of major firms such as SK hynix, LG Energy Solution and GS Caltex.

In contrast, global industry norms rely heavily on joint ventures that attract outside capital and distribute risk. A prime example is the Stargate Project in the United States — a next-generation AI infrastructure initiative backed by OpenAI, Oracle and Japan’s SoftBank, which together pledged a staggering $500 billion.

President Lee Jae Myung speaks during a meeting on AI and semiconductor industry development at the presidential office in Yongsan, central Seoul on Dec. 12. [JOINT PRESS CORPS]

The essence of megaprojects like this, business leaders say, is shared equity — yet Korean law remains an outlier in tightly restricting how second-tier subsidiaries operate.

SK hynix has been most affected. SK Group Chairman Chey Tae-won previously said investment in the company’s new fab in Yongin alone would reach 600 trillion won ($408 billion) all of which would need to be self-funded under current rules.

Chey has called on the government to “create a new system to support the scale of investment required in the AI era.”

In a report submitted to the Fair Trade Commission (FTC) last month, the Federation of Korean Industries (FKI) noted, “Korea is virtually the only country that restricts the ownership stake of subsidiaries under holding companies.”

The FKI also said such constraints are a “structural barrier to mergers and acquisitions in the age of the Fourth Industrial Revolution.”

SK Group Chairman Chey Tae-won speaks during a business forum at Yeouido, western Seoul on Nov. 20. [NEWS1]

President Lee acknowledged the concerns on Thursday, saying, “Chey’s point about investment capital made sense,” and added, “We’re already preparing for this at the institutional level.”

He also argued that “in high-tech sectors requiring massive investment, the kind of monopoly concerns envisioned by separation-of-capital rules are no longer relevant” and that maintaining these restrictions could “instead hinder industrial development.”

Under eased regulations, companies like SK hynix may be allowed to form special purpose companies jointly funded with external capital to build fabs — and use the facilities through long-term contracts or lease arrangements — without violating the law.

A man walks past SK hynix's logo during a semiconductor exhibition at Coex in Gangnam District, southern Seoul on Oct. 24, 2024. [AFP/YONHAP]

Favoring one company or bolstering the industry?

The deregulation debate has drawn criticism that it amounts to a “one-point benefit” for SK hynix — currently the only major conglomerate that simultaneously falls under the categories of AI, semiconductors and second-tier subsidiary restrictions.

FTC Chair Ju Biung-ghi previously dismissed the move as addressing “just a few companies’ complaints.”

However, Choi Sung-jai, a professor of law at Sejong University and former Supreme Court research officer, said, “Even within semiconductors, the ecosystem spans wafers, lithography equipment, materials and logistics. Any deregulation will ultimately benefit the entire value chain, not just one company.”

“When it comes to high-tech industries, where long-term upfront investment is essential, the scale of spending required goes far beyond what national growth funds can support,” said Choi. “This is not just about corporate strategy — it’s about national technological sovereignty and competitiveness.”

Some experts argue that broader institutional design is needed.

“Pivoting to new businesses is a survival strategy for all companies,” said an executive at one of Korea’s top 10 conglomerates. “Rather than piecemeal easing, like the conditional relaxation of corporate venture capital regulations, what we need is a financing system for advanced industries that can be used across the board.”

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY KIM SU-MIN [[email protected]]