South Korea's 2027 budget bets big on AI

South Korea’s government proposed a record 821 trillion won ($597 billion) budget for 2027 on September 1, a 12.8% year-on-year increase and the largest single-year jump in the country’s history. Spending on semiconductors, physical AI, and domestic AI data centers, plus other AI programs, nearly doubles from 10.8 trillion won this year to 21.3 trillion won ($15.5 billion), a 97.2% rise.

The increase is funded by an unexpected windfall: Samsung Electronics and SK Hynix are posting record profits on global demand for high-bandwidth memory used in AI data centers, and the government is routing that tax revenue straight back into the industry that generated it. Semiconductor production-infrastructure spending rises tenfold, from 200 billion won to 2 trillion won, with 2.6 trillion won earmarked for physical-AI demonstration projects and 10,000 GPUs allocated to a national AI foundation-model effort.

The budget still needs National Assembly approval before taking effect, but it extends the same “triple axis” strategy (chips, physical AI, and sovereign AI infrastructure) President Lee Jae-myung set out earlier this year, layering fresh 2027 money on top of prior commitments like Nvidia’s $500 billion infrastructure pact with the SK Group and SK Hynix’s Nasdaq listing. For builders weighing where sovereign AI capacity gets built next, a government funding its buildout from its own chip industry’s profits, rather than external debt or one-time stimulus, is a stronger signal that the spending holds up past the next election cycle.