South Korea plans to put 21.3 trillion won, about $16 billion, into semiconductors, physical AI and AI data centers next year, nearly twice the 10.8 trillion won allocated for the same work in 2026.
Inside the chip package
President Lee Jae-myung presented the plan to the National Assembly on Monday as part of a record 820.9 trillion won budget for 2027, a 12.8% increase that would take total spending to roughly $610 billion.
Within the semiconductor allocation, about 2 trillion won goes to expanding production capacity and 2.1 trillion won to power, water and industrial-complex infrastructure. Those numbers matter because advanced memory and logic lines are limited less by demand than by electricity, cooling water and land that can be permitted quickly.
A sovereign model and 2,000 engineers
A separate 4.7 trillion won is earmarked for developing what Lee called a sovereign AI model with the world's highest performance. The government also plans to train 2,000 specialists in chip design and to support regional semiconductor industries.
The Ministry of Science and ICT proposed 29.6 trillion won of its own, including 9.4 trillion won for the country's AI transition: high-performance models, next-generation AI technologies, security work and additional computing capacity.
Why the government is spending
Korea's growth has leaned on chip exports through the AI build-out, and Lee said annual exports are within reach of $1 trillion for the first time. The budget also raises defense spending 8.2% to 73.3 trillion won, with money for AI, robots and drones in a hybrid manned-unmanned force.
The bet carries risk. Memory prices are cyclical, and a large share of the current boom comes from a handful of hyperscale buyers whose capital spending could slow. Seoul's answer is to widen the base: domestic data centers, robotics and inference capacity that does not depend on exports alone.
Lawmakers must still approve the package, and the opposition has questioned whether the AI line items will produce measurable results within a single budget year.
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