South Korea will invest nearly $16 billion (21.3 trillion won) in artificial intelligence and semiconductors, President Lee Jae Myung announced in his annual budget address to parliament. The investment, nearly double this year's spending, forms part of a record 2027 budget proposal that increases overall government spending by 12.8 percent to 820.9 trillion won.
Lee said the funds would be directed into semiconductors, physical AI and AI data centres, which he called the three megaprojects. Lee added that 4.7 trillion won would be invested in frontier AI development projects aimed at achieving world-leading performance for South Korea's own AI model, which he described as a national strategic asset.
South Korea is Asia's fourth-largest economy and home to two of the world's biggest memory chip makers, Samsung Electronics and SK Hynix. The AI boom has driven demand for memory chips, and South Korea recorded faster-than-expected economic growth in the third quarter, driven by chip exports and investment. Exports totalled $930 billion from January to October and are on track to surpass $1 trillion this year, making South Korea the fourth country to reach the milestone after the United States, China and Germany.
The budget proposal requires parliamentary approval. Lee's Democratic Party of Korea currently holds a majority in parliament.
Analysis
Why This Matters
- The investment represents a major escalation in the global AI race, with a nation already dominant in memory chip hardware moving aggressively into AI models and infrastructure.
- The explicit goal of creating a sovereign national AI model signals that AI leadership is viewed as a core strategic asset for economic and technological independence.
- The record budget increase indicates that AI and semiconductors are being prioritised at the highest fiscal level, likely shaping the next phase of South Korea's economy.
Background
South Korea has long been a powerhouse in semiconductor manufacturing, producing the advanced memory chips essential for AI training and deployment. The Lee administration is building on this industrial base by targeting the next tier of the AI value chain: model development, physical AI and data centres. The record budget proposal reflects a strategic bet that government investment can secure a leading position in a field currently dominated by the United States and China.
What to Watch
- The speed of parliamentary approval for the budget, although the president's party holds a majority.
- The competitive response from other nations, particularly in the Asia-Pacific region, as countries like Japan, Singapore and Taiwan also increase AI spending.
- Milestones in the development of South Korea's national AI model, including benchmarks against leading US and Chinese models.
Checked
12 claims in this story checked against 1 source: 9 supported.
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- Partly supportedSouth Korea pledges nearly $16 billion for AI and semiconductors in a record budget proposal.DW English: “South Korea will aim to invest nearly $16 billion on artificial intelligence and semiconductors, Lee Jae Myung said in his annual budget address to parliament. The Lee administration has unveiled a record budget proposal for next year”
- SupportedLee aims for South Korea's own AI model to achieve world-leading performance.DW English: “He added that 4.7 trillion won will be invested to bolster "frontier AI development projects, with the aim of achieving world-leading performance for our own AI model, a national strategic asset."”
- SupportedChip exports and investment drove South Korea's faster-than-expected third-quarter economic growth.DW English: “South Korea recorded faster-than-expected economic growth in the third quarter, driven by chip exports and investment.”
- Partly supportedPresident Lee Jae Myung announced the investment in his annual budget address to parliament.DW English: “South Korea will aim to invest nearly $16 billion on artificial intelligence and semiconductors, Lee Jae Myung said in his annual budget address to parliament.”
- SupportedSouth Korea will invest nearly $16 billion, or 21.3 trillion won, in AI and semiconductors.DW English: “"We will invest 21.3 trillion won (€14.3 billion, $15.97 billion), nearly twice this year's amount, in AI and the three megaprojects of semiconductors, physical AI and AI data centres," Lee said on Monday.”
- SupportedThe investment is nearly double this year's spending.DW English: “"We will invest 21.3 trillion won (€14.3 billion, $15.97 billion), nearly twice this year's amount, in AI and the three megaprojects of semiconductors, physical AI and AI data centres," Lee said on Monday.”
- Partly supportedThe investment is part of a record 2027 budget proposal that raises government spending by 12.8% to 820.9 trillion won.DW English: “The Lee administration has unveiled a record budget proposal for next year, featuring a 12.8% increase in government spending to 820.9 trillion won (€551.5 billion, $615.62 billion).”
- SupportedLee said the investment would go to semiconductors, physical AI and AI data centres, which he called the three megaprojects.DW English: “"We will invest 21.3 trillion won (€14.3 billion, $15.97 billion), nearly twice this year's amount, in AI and the three megaprojects of semiconductors, physical AI and AI data centres," Lee said on Monday.”
- SupportedLee said 4.7 trillion won would fund frontier AI projects aimed at world-leading performance for South Korea's own AI model, described as a national strategic asset.DW English: “He added that 4.7 trillion won will be invested to bolster "frontier AI development projects, with the aim of achieving world-leading performance for our own AI model, a national strategic asset."”
- SupportedSouth Korea is Asia's fourth-largest economy and home to two of the world's biggest memory chip makers, Samsung Electronics and SK Hynix.DW English: “South Korea is Asia's fourth-largest economy and home to two of the world's biggest memory chip makers — Samsung Electronics and SK Hynix.”
- SupportedThe AI boom has driven demand for memory chips.DW English: “The AI boom has sent demand for memory chips soaring.”
- SupportedExports totalled $930 billion from January to October and are on track to exceed $1 trillion this year, which would make South Korea the fourth country to reach that milestone after the United States, China and Germany.DW English: “Exports totalled $930 billion from January to October and are on track to surpass $1 trillion this year, making South Korea the fourth country to achieve the milestone after the United States, China and Germany.”
