South Korea plans to double AI spending to $16bn in record $616bn budget
South Korea will nearly double its spending on artificial intelligence next year to 21.3 trillion won ($15.97 billion), President Lee Jae Myung told parliament on Monday, as he sought approval for a record 820.9 trillion won ($615.62 billion) budget.
The 12.8% spending increase, proposed in September, is aimed at defending South Korea's technological edge as global competition over AI intensifies. Lee said the AI money would go to semiconductors, physical AI and AI data centres, alongside an 800 trillion won private-sector chip buildout in the country's southwest led by Samsung Electronics and SK Hynix.
Those chipmakers have already lifted the economy: Asia's fourth-largest economy grew faster than expected in the third quarter on chip exports and investment, and exports reached $930 billion from January to October. Lee said annual exports of $1 trillion were now within reach, which would make South Korea only the fourth country to reach the mark after the United States, China and Germany.
He warned that the gains were not being shared evenly, calling for a shift from "growth for the few" to "growth for all". The budget includes a 162.3 trillion won Future Response Fund, financed largely by extra tax revenue from the semiconductor boom, to support growth industries, young people, regional development and education, and to buffer future revenue shortfalls.
Lee said next year's fiscal deficit would narrow to 0.1% of GDP, the lowest in two decades, from 3.9% this year, with the debt-to-GDP ratio falling to 48.3% from 51.6%. Citi economist Kim Jin-wook wrote on Monday that the fund's cumulative financing could reach 215 trillion won across 2026-27, giving Fitch room to lift South Korea from AA- towards AA in the coming years.
