Key points
- Korea proposes 21.3 trillion won for AI and related industries
- Korea's frontier AI model program would get 4.7 trillion won
- Research spending would reach a record 39.5 trillion won
South Korea's proposed 2027 budget would nearly double spending on AI and related industries to 21.3 trillion won ($15.9B), President Lee Jae Myung said in a November 2 speech to the National Assembly.
The package covers semiconductors, physical AI, data centers, and other AI spending. "We'll invest boldly in AI and future growth engines to raise our economy's growth potential," Lee said, according to the full text of the speech published by Sisa Journal.
The full budget proposal calls for 820.9 trillion won ($613B) in spending, up more than 10% from this year. A chip boom is expected to lift tax revenue, Yonhap reported. The National Assembly still has to approve the budget.
Where the 21.3 trillion won goes
Lee named six items in the AI package:
- Frontier AI models: 4.7 trillion won ($3.5B) to develop Korea's own AI models, with a goal of matching the world's best.
- Power, water, and industrial parks: 2.1 trillion won ($1.6B), spent ahead of demand so companies don't delay projects for lack of infrastructure.
- Chip production: 2 trillion won ($1.5B) to start fabs in the Seoul area early and build a chip cluster in the southwest. A new special account for the chip industry will give it a steady source of funding, Lee said.
- Physical AI tests: 500 billion won ($373M) to try out AI-powered machines in eight areas, including manufacturing, smart factories, and defense.
- AI for factory know-how: AI tools that capture skilled workers' experience in manufacturing, which Lee said he'd invest in boldly. He didn't give a cost.
- Public AI agents: a program Lee called "AI for everyone," which would tell people about public services they qualify for and help them apply. He didn't give a cost.
By our calculations, the four items with a price add up to 9.3 trillion won ($6.9B), less than half of the 21.3 trillion won total. Lee didn't break down the rest in the speech.
Research spending would reach a record
Lee also said research and development spending would rise by 4 trillion won to 39.5 trillion won ($29.5B), the largest R&D budget on record. That includes 13.8 trillion won ($10.3B) for 10 strategic technologies the government calls NEXT.
The science ministry's R&D plan from September 1 puts AI research at 4.1 trillion won ($3.1B), up 69.1%, Dong-A Science reported. It measures only research spending, so it's narrower than the 21.3 trillion won Lee cited.
The spending push comes as chips carry Korea's economy. Semiconductor exports jumped 259% in October, and the 2027 plan builds on the physical AI spending Korea set out in its 2026 budget.
