S. Korea policy chief's AI dividend plan rattles markets

South Korea's presidential chief of staff for policy proposed Monday night that excess tax revenue from the country's AI and semiconductor boom be distributed to citizens as "national dividends," sending the benchmark KOSPI index sharply lower the following day, the Korea Times reported.

The Facebook post by Kim Yong-beom landed at a volatile moment for South Korea's tech sector: Samsung Electronics faces a threatened 18-day worker strike over profit-sharing demands beginning May 21, while President Lee Jae Myung's administration has already raised the top corporate tax rate to 25 percent.

The KOSPI, which opened Tuesday at a record 7,999 points, fell as low as 7,421 — a 5.12 percent intraday drop — before closing at 7,643, a 2.3 percent decline, according to the Korea Times. Shares of memory chip giants Samsung Electronics and SK hynix fell 2.28 percent and 2.39 percent, respectively, on the day.

In the post, Kim argued that Korea's dominant position in the global AI supply chain rests on generations of public investment. "The gains from the AI infrastructure era are not the result of a few specific companies alone," Kim wrote, according to the Korea Times. "They are built on an industrial foundation accumulated by the entire nation over the past half century. If so, part of those gains should be structurally returned to all citizens."

The presidential office moved quickly to limit political damage, characterizing Kim's post as his "personal opinion" with no internal policy discussion behind it, the Korea Times reported.

Business leaders expressed alarm. One industry official told the Korea Times that the proposal "does not appear much different from the far-fetched arguments often seen in online communities calling for corporate operating profits to be shared out of jealousy." A separate official warned that "excess profits are not a source for short-term distribution, but a key resource for future competitiveness through research and development, facility investment and job creation."

Opposition lawmakers were equally critical. Rep. Park Soo-young of the People Power Party wrote on Facebook that shareholders already share in AI gains without government direction. "If people want dividends, they can become shareholders," Park said, according to the Korea Times. Rep. Lee Jun-seok of the Reform Party argued that any surplus revenue should be used to "repay the country's debt, rather than using it for vote-buying."

The controversy comes as labor tensions escalate at both chipmakers. SK hynix and its union agreed to remove bonus caps and direct 10 percent of operating profit to payouts, the Korea Times reported. Samsung Electronics unions, however, are demanding a 15 percent allocation of operating profits and have threatened to begin an 18-day strike on May 21 if their demands are not met.

Kim emphasized that his proposal assumed excess tax revenue would actually be generated — a condition not currently in place — but critics told the Korea Times that the policy signal itself was enough to unsettle investors regardless of whether any legislation follows.