South Korea to Double AI and Chip Spending to 21.3 Trillion Won in 2027

South Korea will allocate 21.3 trillion won ($16 billion) to semiconductors and artificial intelligence in 2027, nearly double this year's figure and a record for the category. President Lee Jae Myung announced the plan Monday in his annual budget speech to parliament.

"We will make bold investments in AI and future growth engines to boost our economy's growth potential," Lee said. He called the figure "nearly double this year's amount". The spending spans data centres, robotics and chipmaking.

What does the record budget contain?

The total 2027 budget proposal stands at 821 trillion won, up 12.8 percent year on year. It is the largest budget proposal on record for the country. Lee needs parliament to pass the plan, which appears likely given his party's majority.

Within the AI and chip envelope, the government will invest 4.7 trillion won in what Lee described as "frontier AI development projects, with the aim of achieving world-leading performance for our own AI model, a national strategic asset".

A further 2.1 trillion won will go to electricity, water supply and industrial complex infrastructure. Lee noted that semiconductor fabs require stable power around the clock, 365 days a year.

How big is the defense build-up?

The defense budget would rise roughly eight percent from this year to 73.3 trillion won. Seoul aims to secure nuclear-powered submarines and KF-21 fighter jets.

Lee said the country wants to "rapidly transform our military into a smart, elite force by establishing integrated manned and unmanned systems based on AI, robots and drones".

The pledge carries geopolitical weight. North Korea has recently tested a new precision-guided torpedo system and an intermediate-range hypersonic missile, and claimed both use AI technology. Last year Seoul agreed with Washington to build nuclear-powered submarines. Pyongyang condemned the submarine programme as a "dangerous attempt at confrontation".

What corporate money sits behind the plan?

South Korea hosts Samsung Electronics and SK hynix, two of the world's three largest memory chipmakers. AI infrastructure demand has squeezed global memory supply and sent their profits and share prices sharply higher.

In June, Samsung and SK hynix announced plans to invest more than 4,755 trillion won ($3.5 trillion) domestically, a record level of corporate investment for the country. The same month, Lee announced a public-private partnership built on "three mega-projects": expanding chip production hubs nationwide, establishing robotics R&D centres, and building gigawatt-scale AI data centres. The government at the time outlined nearly $1.2 trillion in planned investment, more than two-thirds of South Korea's GDP.

The boom has also reached labor relations. Chip engineers and other workers have pressed for higher payouts in tense negotiations at Samsung and SK hynix.

Where does the funding come from?

In September, Seoul announced a 162.3 trillion won "Future Fund" for next year. The fund is designed to channel record tax revenues from the chip boom into long-term growth.

The 2027 package now moves to parliament, where passage would lock in the largest state commitment to AI and semiconductors in the country's history and sharpen competition with China, Japan and the United States for AI-era chip supremacy.