Seoul (GNP): South Korea will nearly double its spending on artificial intelligence (AI) and semiconductors in 2027, setting aside a record 21.3 trillion won ($16 billion) to strengthen its technology sector and drive future economic growth, President Lee Jae Myung has announced.
Lee made the announcement in his annual budget speech to parliament on Monday. He said the money would cover semiconductor manufacturing, AI development, data centres and robotics, and described the allocation as almost twice the amount earmarked for the current year.
A large share is aimed at AI itself. The government will provide 4.7 trillion won for advanced AI projects, with the goal of producing a domestically developed AI model that can compete at the highest international level.
Lee added that chip manufacturing needs a reliable electricity supply around the clock throughout the year. For that reason, the government will invest a further 2.1 trillion won in electricity, water supply and industrial infrastructure to support the semiconductor industry.
The spending builds on a public-private partnership announced in June, which centres on three projects: expanding semiconductor manufacturing hubs across the country, setting up robotics research and development centres, and building gigawatt-scale AI data centres. The government had earlier outlined investment plans worth nearly $1.2 trillion under the wider initiative.
Industry is moving in the same direction. Samsung Electronics and SK hynix, two of the world’s leading memory chip makers, announced plans in June for combined investments of more than 4,755 trillion won ($3.5 trillion) in South Korea, a record level of corporate investment. Both are benefiting from soaring demand for chips used in AI systems and data centres, and the global AI boom has lifted their profits and share prices while tightening memory chip supplies and intensifying the competition for skilled semiconductor engineers.
Seoul has also moved to turn that boom into lasting growth. In September it unveiled a 162.3 trillion won Future Fund for 2027, designed to channel higher tax revenues from the semiconductor boom into long-term economic growth.
Technology also sits at the centre of the defence plans Lee outlined in the same speech. The government has proposed raising defence spending by around 8 per cent to 73.3 trillion won in 2027, with plans to acquire nuclear-powered submarines and KF-21 fighter jets. Lee said the aim is to turn the military into a smart, elite force built on integrated manned and unmanned systems using AI, robots and drones.
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Those plans come amid heightened security tensions on the Korean Peninsula. North Korea has recently tested several weapons systems, including a precision-guided torpedo system and an intermediate-range hypersonic missile, both of which Pyongyang said used AI technology. South Korea and the United States agreed last year to build nuclear-powered submarines, a plan North Korea has strongly criticised as a dangerous attempt at confrontation.
The AI and chip money forms part of an overall 2027 budget proposal of 821 trillion won, up 12.8 per cent on the previous year and the largest in the country’s history. The proposal needs parliamentary approval, which is expected because the governing party holds a majority.
Lee said, “We will make bold investments in AI and future growth engines.”
