South Korea Sets Record 800 Trillion Won Budget for AI

The government of South Korea has announced a record fiscal 2027 budget of more than 800 trillion won ($530.97 billion), a more than 10 percent increase over the current year. This spending surge is funded by a tax revenue windfall from semiconductor giants Samsung Electronics and SK hynix, whose profits have soared due to global demand for AI data center memory chips. Budget Minister Park Hong-keun expects tax revenues to reach at least 500 trillion won, far exceeding previous estimates of 412 trillion won.

Lee Jae Myung, President of South Korea, described this revenue surge as a "golden window" to secure global AI dominance. The budget prioritizes three mega-projects: semiconductor investments, AI data centers, and physical AI. A central component of this strategy is an 800 trillion won public-private investment to build a chip hub in southwest South Korea to combat regional inequality. To support these goals, the government will establish a Future Response Fund to invest in youth, talent, and growth engines, while restructuring 50 trillion won by cutting underperforming programs.

Parallel to these investments, the government raised its 2026 economic growth forecast to 3.0%, a five-year high. Finance Minister Koo Yun-cheol noted that while exports are robust, the economy faces risks from inflation, high exchange rates, and conflict in the Middle East. The administration aims to eventually increase gross national income per capita to $50,000.