South Korea targets major AI expansion in record national spending plan

South Korea plans to significantly increase government spending on artificial intelligence and related technologies as it seeks to strengthen its economy amid accelerating global competition.

President Lee Jae Myung announced the plan on Monday during a speech to the National Assembly, asking lawmakers to approve the national budget for the upcoming year. Under the proposal, the government would allocate 21.3 trillion won, roughly 15.97 billion dollars, directly to artificial intelligence initiatives and three major development projects covering semiconductors, physical AI, and data centres. The figure represents nearly double the spending allocated in the previous year.

The targeted funding forms part of a wider fiscal proposal first introduced in September, which would expand total government expenditure by a record 12.8 percent to 820.9 trillion won. The administration aims to bolster the country's technological capabilities at a time when major international powers are competing aggressively over advanced computing and software.

South Korea's economic momentum has increasingly depended on the artificial intelligence sector, as surging worldwide demand for sophisticated computer chips has driven revenue gains for major domestic memory manufacturers, including Samsung Electronics and SK Hynix. This surge contributed to third-quarter economic growth that exceeded financial forecasts. Between January and October, South Korean exports reached 930 billion dollars, leaving the nation positioned to surpass 1 trillion dollars in annual outbound shipments, an achievement previously reached only by the United States, China, and Germany.

While acknowledging the export milestones, Lee cautioned that the rewards of this technological expansion have not spread widely across society. He emphasized the necessity of moving away from uneven economic development, stating that the country must transition from an environment where financial gains are confined to select corporations, regions, and social groups toward broader shared prosperity.

To address those disparities and manage long-term risks, the budget includes a 162.3 trillion won Future Response Fund. The fund will draw heavily on surplus tax receipts generated by the semiconductor sector. Resources are slated to back emerging industries, educational programs, youth support, and regional development initiatives, while serving as a financial cushion against potential declines in state revenue.

The public spending push aligns with large-scale industrial projects currently underway across the country. These include an 800 trillion won private-sector investment by Samsung and SK Hynix to establish advanced chip manufacturing facilities in the southwestern part of the country, alongside complementary developments in data infrastructure and physical artificial intelligence.