South Korea to double spending on AI and chips in 2027
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South Korean President Lee Jae Myung delivering his budget speech for 2027 at the National Assembly in Seoul on Nov 2.
PHOTO: AFP
- South Korea will nearly double AI and chip spending in 2027 to 21.3 trillion won, or US$16 billion, President Lee Jae Myung said in Parliament.
- The money will fund semiconductors, physical AI and AI data centres, plus 4.7 trillion won for frontier AI projects and a national model.
- The 2027 budget is a record 821 trillion won, up 12.8%, with defence also rising to 73.3 trillion won for AI-led military upgrades.
AI generated
SEOUL – South Korea will double spending on artificial intelligence and semiconductors in 2027 to a record high, President Lee Jae Myung said on Nov 2, pledging to use the technology to turn the country’s military into a “smart, elite force”.
Lee, in his annual budget speech to Parliament, said 21.3 trillion won (S$20.5 billion) would be allocated to chipmaking and AI, spanning data centres to robotics.
“We will make bold investments in AI and future growth engines to boost our economy’s growth potential,” he said, adding that the figure was “nearly double 2026’s amount”.
On the defence budget, the government wants to see an increase of around 8% from 2026 to 73.3 trillion won, aiming to secure nuclear-powered submarines and KF-21 fighter jets.
Lee said Seoul aims to “rapidly transform our military into a smart, elite force by establishing integrated manned and unmanned systems based on AI, robots and drones”.
North Korea recently tested a slew of weapons, including a new precision-guided torpedo system and an intermediate-range hypersonic missile, both of which it said used AI technology.
In 2025, Seoul announced an agreement with Washington to build nuclear-powered submarines, with Pyongyang slamming the submarine programme as a “dangerous attempt at confrontation”.
Overall, the 2027 budget plan totals 821 trillion won, a 12.8% increase year on year, making it the largest budget proposal on record.
Lee now needs Parliament to pass the budget proposal, which is likely given his party’s majority.
‘Mega projects’
The country is a tech powerhouse home to Samsung Electronics and SK hynix, two of the world’s three biggest makers of memory chips – computer components in huge demand thanks to the AI boom.
Lee said the government will invest 4.7 trillion won to support “frontier AI development projects, with the aim of achieving world-leading performance for our own AI model, a national strategic asset”.
In June, Lee announced a public-private partnership centred on “three mega-projects” – aiming to expand chip production hubs nationwide, establish robotics research and development centres, and build gigawatt-scale AI data centres.
The government at the time unveiled plans for nearly US$1.2 trillion (S$1.53 trillion) in investment, equivalent to more than two-thirds of South Korea’s gross domestic product.
Samsung and SK hynix also in June announced plans to invest more than 4,755 trillion won in South Korea, marking a record level of corporate investment in the country.
South Korean chipmakers have seen profits and share prices skyrocket as frenzied demand for AI infrastructure squeezes the global supply of memory chips.
The boom has also spurred chip engineers and other workers to seek higher payouts in tense negotiations at companies including Samsung and SK hynix.
In September, Seoul announced plans for a 162.3 trillion won “Future Fund” in 2027, aimed at channelling record tax revenues from the country’s chip boom into long-term growth.
Lee said on Nov 2 that the government would also invest 2.1 trillion won in electricity, water supply and industrial complex infrastructure, as semiconductor plants require a stable power supply around the clock, 365 days a year. AFP