South Korean President Lee Jae Myung has presented the country’s largest-ever budget, with the government prioritizing artificial intelligence and other technologies seen as key to future growth.
Total spending in 2027 is scheduled to increase 12.8% to 820.9 trillion won ($610.14 billion). The plan includes 21.3 trillion won for semiconductors, physical AI and AI data centers, almost twice the amount allocated in 2026.
A further 4.7 trillion won will fund the development of a sovereign AI model intended to achieve what Lee described as the world’s highest performance. The government also plans to expand training programs, including one for 2,000 specialists focused on semiconductor design and the regional semiconductor industry.
AI education will also be expanded for students, job seekers and current workers. South Korea has established university contract departments that connect degree programs with companies such as Samsung Electronics and SK Hynix. Participating companies help develop curricula, provide financial support and recruit graduates who meet their requirements.
Lee said the additional spending would produce virtually no net increase in government debt because newly issued bonds would be used to repay existing debt.
The budget also raises defense spending by 8.2% to 73.3 trillion won. Lee said the country would work toward a military based on a hybrid system combining manned and unmanned capabilities, including AI, robots and drones. The plan also includes increased social security spending for young people.
The investment push comes as semiconductor exports continue to support South Korea’s economy amid strong global demand for computing power linked to the AI boom. Exports reached a record $115.3 billion in October, up 93.7% from a year earlier, according to Korea Customs Service data.
Exports totaled $930 billion during the first 10 months of 2026, exceeding $900 billion for the first time. October produced a $42.5 billion trade surplus, while imports rose 36% year over year to $72.8 billion. Lee said the country was approaching $1 trillion in annual exports, led by strong performance in sectors including semiconductors.
Sources: CNBC Markets.