South Korea will nearly double AI spending to $16B in a record budget

South Korean President Lee Jae Myung visits Donald Trump in the Oval Office, 25 August 2025.

South Korea will spend 21.3 trillion won (about $16 billion) on AI, chips and AI data centres next year. President Lee Jae Myung set out the plan in his budget speech to the National Assembly on Monday.

“We will invest 21.3 trillion won, nearly twice this year’s amount, in AI and the three megaprojects of semiconductors, physical AI and AI data centres,” Lee said.

The money sits inside a record 2027 budget of 820.9 trillion won (about $616 billion), up 12.8% on this year. Lee asked lawmakers to pass it by 2 December, the legal deadline.

A separate 4.7 trillion won will go to frontier AI projects. Lee wants South Korea’s own AI model to reach world-leading performance and called it a national strategic asset. Another 13.8 trillion won is set aside for 10 next-generation strategic technology fields, The Korea Times reported.

The government also plans to train 2,000 specialists in chip design and regional chip industries, CNBC reported. It will expand AI education for students, job seekers and workers.

Defence spending rises 8.2% to 73.3 trillion won.

“We will rapidly transform into a smart, elite, and powerful military by establishing a hybrid manned and unmanned system based on AI, robots, and drones,” Lee said.

The budget also creates a 162.3 trillion won Future Response Fund. Extra tax revenue from the chip boom will pay for most of it, Reuters reported. It will back growth industries, young people, regional development and education.

Lee said the fiscal deficit will narrow to 0.1% of GDP next year, from 3.9% this year. He said debt will fall to 48.3% of GDP, from 51.6%. South Korea’s exports reached $930 billion from January to October and are on track to pass $1 trillion this year.

Members of the main opposition People Power Party protested in the Assembly lobby as Lee arrived. Their placards described the fund as “future debt”, according to The Korea Times.

Party spokesperson Park Sung-hoon called the budget a “declaration of war on the people”. Lee’s Democratic Party, which holds a majority in parliament, said it would pass the bill on time.

South Korea’s AI push could need 20 new nuclear reactors of power, TNW reported in September. Korean AI data centre firm Elice had a record-worst IPO debut in October. Samsung will make AI memory parts at its second Texas plant.

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