South Korea Unveils Record Budget Increase to Ride AI Boom

South Korea is seeking to turn an AI-driven memory-chip windfall into a broader technology investment cycle as President Lee Jae Myung confronts slowing potential growth, an aging population and intensifying global competition. The strategy channels unusually strong semiconductor tax receipts into chips, physical AI and data centers, aiming to reinforce the country’s manufacturing base while cultivating new growth engines. The 2027 plan is the first annual budget drafted entirely under Lee’s administration.

The Ministry of Planning and Budget unveiled the proposal on Sept. 1, setting 2027 spending at 820.9 trillion won ($595 billion), up 12.8% from the 2026 budget, the fastest increase on record. It allocates 21.3 trillion won to AI and three technology megaprojects, a 97.2% rise, and creates a 162.3 trillion-won Future Fund from semiconductor-driven windfall revenue. Of that fund, 45.4 trillion won will support youth, growth engines, regions, education and talent.