The Pulse
South Korea Pledges $15.97B for AI and Chip Projects
President Lee Jae Myung pledged 21.3 trillion won ($15.97 billion) for South Korea’s AI, semiconductor, physical AI and data-center projects in 2027. The proposed record budget faces opposition criticism over rising national debt before a D
AI.info Team · Written with AI · fact-checked ·
President Lee Jae Myung pledged 21.3 trillion won ($15.97 billion) for South Korea’s AI and chip-related projects on November 2, as opposition lawmakers protested his government’s record spending plan over concerns about national debt. The announcement came in Lee’s address to parliament, where he sought support for the 2027 budget bill, which still requires lawmakers’ approval.
“We will invest 21.3 trillion won ($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.
Lee Jae Myung, president of South Korea
A budget built around chips, AI and infrastructure
The 21.3 trillion won allocation covers AI investment and three government-designated megaprojects: semiconductors, physical AI and AI data centers. Lee’s administration says the spending will strengthen South Korea’s growth prospects and technological position. The pledge nearly doubles the comparable amount for this year.
The proposed 2027 budget totals 820.9 trillion won, a 12.8% increase from this year and the largest annual expansion on record, Lee told lawmakers. The government submitted the plan in September. Its case for the increase rests in part on expected tax receipts from the semiconductor boom, which has boosted profits at Samsung Electronics and SK Hynix.
Factories need power and water, not just funding
The spending plan sets aside 2 trillion won to expand semiconductor production capacity, including projects in the Seoul region and a southwestern chip cluster. A further 2.1 trillion won is planned for supporting infrastructure, including electricity, water and industrial-complex development, according to the Seoul Economic Daily’s account of the budget address.
Physical AI receives 500 billion won for field demonstrations across eight public and private sectors, including manufacturing and smart factories. The plan also assigns 4.7 trillion won to frontier AI development, with the stated goal of improving the performance of South Korean-developed models.
Opposition protests put approval in focus
The plan faces a political test before it can take effect. Members of the main opposition People Power Party protested during Lee’s address, accusing the government of increasing national debt. Lee asked rival parties to support passage of the bill by December 2, the statutory deadline for the 2027 budget.
Lee presented the spending as an investment in future growth, while the opposition’s protest focused on its fiscal cost. The proposal also includes a 160 trillion won Future Fund aimed at supporting younger generations, growth industries and regional development; 45.4 trillion won of that fund is slated for allocation next year, Yonhap reported.
For South Korea’s chip industry, the budget proposal links factory expansion to the energy, water and industrial infrastructure needed to support production. Whether the allocations survive parliamentary negotiations will determine how much of Lee’s announced investment moves from proposal to approved public spending.