Record budget for AI and semiconductors

South Korea's government plans to invest 21.3 trillion won (14.3 billion euros) in artificial intelligence and semiconductors in its 2027 budget, the largest such allocation in the country's history. President Lee Jae Myung announced the plan on Monday, November 2, 2026, during a speech to Parliament, emphasizing the importance of advancing domestic AI capabilities and semiconductor manufacturing.

2027 budget size and growth

The proposed 2027 budget totals 821 trillion won, marking a 12.8 percent increase from the 2026 budget. This makes it the largest budget ever recorded in South Korea, with a significant portion dedicated to AI and semiconductor development to support the nation's technological ambitions.

Defense budget and military modernization

The defense budget is set to rise by 8.2 percent compared to this year, reaching 73.3 trillion won. The government plans to focus on acquiring nuclear-powered submarines and KF-21 fighter jets, as well as modernizing the military with AI, robots, and drones to create an "elite intelligent force."

Long-term semiconductor and AI plan

In June, South Korea unveiled a ten-year plan worth 180 quadrillion won, equivalent to two-thirds of the country's 2025 GDP. This ambitious initiative aims to build advanced semiconductor factories and AI data centers, capitalizing on the global "supercycle" in semiconductor demand and strengthening the nation's position in the tech industry.

Private sector investments in semiconductors

Samsung and SK hynix, two of South Korea's leading memory chip manufacturers, have pledged to invest over 4.755 trillion won in the country. This includes plans for four new semiconductor factories, with Samsung and SK hynix each constructing two, reflecting strong confidence in the sector due to rising global demand for AI infrastructure.

Future Fund and tax revenue allocation

Seoul plans to establish a "Future Fund" of 162.3 trillion won in 2027 to manage increased tax revenues from the booming semiconductor and AI industries. The fund aims to address social inequalities and support growth areas like youth development, regional revitalization, education, and talent cultivation, as outlined by President Lee Jae Myung.