South Korea Unveils Record $14.3 Billion Investment for AI and Semiconductors

PARIS, Nov 2 (OPA) — President Lee Jae Myung presented the 2027 budget proposal to Parliament on Monday, outlining a total expenditure of 821 trillion won, a 12.8% increase over 2026. The government plans to allocate 21.3 trillion won specifically toward semiconductors, physical AI infrastructure, and data centers. Within this allocation, 4.7 trillion won is earmarked for advanced AI development projects intended to establish a proprietary, world-class national AI model.

"We will allocate 21.3 trillion won to semiconductors, physical AI, and AI data centers, which is nearly double the amount of this year," Lee stated during his address. The budget also includes a significant boost to defense spending, rising 8.2% to 73.3 trillion won. This military funding will prioritize the acquisition of nuclear-powered submarines and KF-21 fighter jets, alongside the integration of AI-driven, unmanned robotic systems into the armed forces.

This fiscal strategy builds upon a broader ten-year initiative launched in June to construct advanced semiconductor manufacturing hubs and AI data centers. The long-term project, valued at 1.8 quadrillion won, represents approximately two-thirds of South Korea’s 2025 nominal GDP. Major industry players Samsung Electronics and SK hynix are supporting this expansion with private investments exceeding 4.75 trillion won, focusing on the construction of four new semiconductor fabrication plants.

To sustain this growth, Seoul plans to establish a 162.3 trillion won "Future Fund" next year, utilizing tax revenues generated by the semiconductor sector's recent performance. The government intends to channel these funds into youth development, regional growth, and educational talent programs to address domestic social disparities. The budget proposal now moves to the National Assembly, where it is expected to pass given the current parliamentary majority held by the president's party.