South Korea allocates record budget for sovereign AI and chip development
The South Korean government has proposed a record 820.9 trillion won budget for 2027, prioritizing heavy investment in AI infrastructure and semiconductor design.
President Lee Jae Myung has unveiled South Korea’s largest ever budget, proposing a total expenditure of 820.9 trillion won ($610.14 billion) for 2027. This represents a 12.8% increase, driven by a strategic pivot toward advanced technology sectors.
The administration plans to allocate 21.3 trillion won toward semiconductors, physical AI, and data centers, nearly doubling the funding level from 2026. Within this framework, 4.7 trillion won is designated specifically for the development of a sovereign AI model. To support this hardware and software expansion, the government intends to train 2,000 specialists in semiconductor design and regional chip manufacturing, expanding existing partnerships with firms like Samsung Electronics and SK Hynix.
The budgetary expansion follows robust economic performance, with the IMF forecasting 3.3% growth for South Korea in 2026. The government intends to fund the spending through bond issuance aimed at retiring existing debt, maintaining that the net impact on government debt will be minimal.
Additionally, defense spending will rise by 8.2% to 73.3 trillion won, with a focus on implementing AI-integrated robotic and drone systems. As South Korea approaches $1 trillion in annual exports, these investments are intended to sustain the nation’s growth trajectory amid rising global demand for computing power.