South Korean President Lee Jae Myung on Monday unveiled the country’s largest-ever budget, promising to “boldly invest in AI and future growth engines.”
Addressing the National Assembly, Lee said total government spending would increase 12.8% in 2027 to 820.9 trillion won ($610.14 billion). The plan includes 21.3 trillion won for semiconductors, physical AI and AI data centers—nearly twice the amount allocated in 2026.
The government will separately commit 4.7 trillion won to developing a sovereign AI model that Lee said would deliver the “world’s highest performance.”
Investment in advanced talent will also expand. The government plans to train 2,000 specialists to “lead semiconductor design and the regional semiconductor industry,” while broadening AI education for students, job seekers and workers already in employment.
South Korea has also established university “contract departments,” allowing students to pursue company-linked degrees that can lead to jobs at firms such as Samsung Electronics and SK Hynix before they graduate.
Participating companies help shape the curriculum, provide financial support and recruit graduates who meet their requirements.
The record budget comes as the International Monetary Fund forecasts South Korea’s economy will expand 3.3% in 2026, marking its fastest growth since the post-pandemic rebound in 2021.
Lee said the increased spending would produce “virtually no net increase in government debt,” because newly issued bonds would be used to repay existing obligations.
The budget also provides for higher defense spending and expanded social security support for young people. Defense expenditure is scheduled to rise 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.
South Korea’s robust economic performance has been powered largely by semiconductor exports, which have benefited from rising global demand for computing capacity amid the artificial intelligence boom.
Exports jumped 93.7% from a year earlier to a record $115.3 billion in October, according to data released Sunday by the Korea Customs Service.
Shipments reached $930 billion during the first 10 months of 2026, exceeding $900 billion for the first time.
South Korea recorded a $42.5 billion trade surplus in October, while imports climbed 36% year on year to $72.8 billion.
Lee said the country was approaching $1 trillion in annual exports, pointing to strong results across major industries, including semiconductors.
