South Korea pledges $610 billion budget to build top sovereign AI

South Korean President Lee Jae Myung presented the nation’s largest budget plan to the National Assembly. Total government spending for 2027 will increase by 12.8% to 820.9 trillion won, or about $610.14 billion. The initiative focuses on expanding emerging technologies and securing national capabilities in advanced computing.

Targeting sovereign AI and semiconductors

Under the proposal, South Korea will allocate 21.3 trillion won toward physical AI, semiconductors, and AI data centers. This funding is roughly double the amount set aside for 2026. An additional 4.7 trillion won is designated specifically to develop a domestic sovereign AI model aimed at achieving top global performance.

To support this push, the government plans to train 2,000 specialists focused on semiconductor design and regional production. The state is also expanding artificial intelligence coursework for students, job seekers, and current professionals. South Korea already uses university contract departments, which partner with firms like Samsung Electronics and SK Hynix. These programs let tech companies help shape degree curricula, provide funding, and hire graduates directly.

Defense expansion and export growth

Beyond commercial technology, defense spending will climb 8.2% to 73.3 trillion won. The military plans to build hybrid systems that integrate crewed units with autonomous drones and robotics. President Lee stated the increased national spending would yield almost no net gain in government debt because new bond issuances will pay off maturing debt.

The policy moves follow strong export results fueled by worldwide appetite for computer chips:

• October exports rose 93.7% year-on-year to a record $115.3 billion.
• Outbound shipments reached $930 billion across the first ten months of 2026.
• October produced a trade surplus of $42.5 billion, even as imports climbed 36% to $72.8 billion.

The International Monetary Fund expects South Korea’s economy to expand 3.3% in 2026, marking its fastest growth rate since 2021.