South Korea Doubles AI And Semiconductor Spending For 2027

Seoul: (News Desk) – South Korea has announced plans to nearly double its investment in artificial intelligence (AI) and semiconductors in 2027, setting aside a record 21.3 trillion won ($16 billion) to strengthen its technology sector and support future economic growth.

President Lee Jae Myung announced the investment while presenting his annual budget speech to parliament on Monday, saying the allocation would cover several key areas, including semiconductor manufacturing, AI data centres and robotics.

“We will make bold investments in AI and future growth engines to boost our economy’s growth potential,” Lee said, describing the proposed allocation as nearly twice the amount earmarked for the current year.

Alongside technology investment, the government plans to increase defence spending by around eight percent to 73.3 trillion won. The proposed funding will support military modernisation, including the acquisition of nuclear-powered submarines and KF-21 fighter jets.

Lee said South Korea intended to transform its armed forces into a technologically advanced and highly capable military by integrating artificial intelligence, robotics and drones into manned and unmanned defence systems.

The announcement comes amid growing military developments on the Korean Peninsula. North Korea has recently tested several weapons, including a precision-guided torpedo system and an intermediate-range hypersonic missile, both of which Pyongyang claimed incorporated AI technology.

South Korea also announced an agreement with Washington last year to develop nuclear-powered submarines, a programme that North Korea criticised as a dangerous move towards confrontation.

The country’s proposed 2027 budget stands at 821 trillion won, representing a 12.8 percent increase compared with the previous year and marking the largest budget proposal in South Korean history. The plan now requires parliamentary approval, which is expected given the ruling party’s majority.

Major technology investment projects

South Korea plans to allocate 4.7 trillion won to advanced AI development projects, with the objective of producing a globally competitive domestic AI model that Lee described as a strategic national asset.

The investment builds on a public-private partnership announced in June, focusing on three major initiatives: expanding semiconductor manufacturing hubs across the country, establishing robotics research and development centres, and developing large-scale AI data centres with gigawatt-level capacity.

The government previously outlined investment plans worth nearly $1.2 trillion under the initiative, equivalent to more than two-thirds of South Korea’s gross domestic product.

Major technology companies Samsung Electronics and SK hynix also announced plans in June to invest more than 4,755 trillion won ($3.5 trillion) in South Korea, marking a record corporate investment commitment.

Both companies have benefited from surging global demand for memory chips used in AI infrastructure, with their profits and share prices rising amid tight global supplies.

However, the AI-driven boom has also intensified competition for skilled semiconductor engineers and other employees, leading to increasingly tense wage negotiations at major chipmakers.

In September, Seoul announced a 162.3 trillion won Future Fund for next year, aimed at directing increased tax revenues from the semiconductor industry towards long-term economic development.

Lee further announced plans to invest 2.1 trillion won in electricity, water supply and industrial infrastructure to support semiconductor manufacturing facilities, which require uninterrupted power supplies throughout the year.