South Korea will nearly double its spending on artificial intelligence and semiconductors in 2027, bringing it to a record high. President Lee Jae Myung announced the plan on Monday in his annual budget speech to parliament.
Lee said 21.3 trillion won ($16 billion) will go to chipmaking and AI. The money will cover areas ranging from data centres to robotics.
He told lawmakers the government will make large investments in AI and future growth engines to lift the economy’s growth potential. He said the figure was “nearly double this year’s amount.”
Record Budget Includes Defence Increase
The full 2027 budget plan totals 821 trillion won. That is a 12.8 percent increase from this year and the largest budget proposal on record.
Defence spending is set to rise by about eight percent to 73.3 trillion won. The government wants to secure nuclear-powered submarines and KF-21 fighter jets.
Lee said Seoul aims to “rapidly transform our military into a smart, elite force.” He said this would be done through integrated manned and unmanned systems based on AI, robots and drones.
North Korea has recently tested several weapons, including a new precision-guided torpedo system and an intermediate-range hypersonic missile. Pyongyang said both used AI technology.
Last year, Seoul announced an agreement with Washington to build nuclear-powered submarines. North Korea called the programme a “dangerous attempt at confrontation.”
Parliament must still pass the budget. Approval is likely because Lee’s party holds a majority.
Chipmakers at the Centre of the Plan
South Korea is home to Samsung Electronics and SK hynix. They are two of the world’s three biggest makers of memory chips, which are in high demand due to the AI boom.
Lee said 4.7 trillion won will support frontier AI development projects. The goal is for the country’s own AI model to reach world-leading performance, which he called “a national strategic asset.”
In June, Lee announced a public-private partnership built around three “mega-projects.” These aim to expand chip production hubs nationwide, set up robotics research centres and build gigawatt-scale AI data centres.
At that time, the government revealed plans for nearly $1.2 trillion in investment. That is equal to more than two-thirds of South Korea’s GDP.
Samsung and SK hynix also announced plans in June to invest more than 4,755 trillion won ($3.5 trillion) in South Korea. It was a record level of corporate investment in the country.
Profits and share prices at South Korean chipmakers have climbed sharply. Strong demand for AI infrastructure has tightened the global supply of memory chips.
The boom has also led chip engineers and other workers to push for higher pay. Talks at companies including Samsung and SK hynix have been tense.
In September, Seoul announced plans for a 162.3 trillion won “Future Fund” for next year. It is meant to channel record tax revenue from the chip boom into long-term growth.
On Monday, Lee also said the government will invest 2.1 trillion won in electricity, water supply and industrial complex infrastructure. Chip plants need a stable power supply around the clock, every day of the year.
