South Korea’s government proposed a record 821 trillion won budget for 2027, about $600 billion, a 12.8 per cent rise on this year and the largest annual increase on record. It named semiconductors, physical AI and AI data centres as its three priority projects, together worth 21.3 trillion won, up 97.2 per cent on current spending. The proposal goes to the National Assembly by Thursday.
Within that, 2.6 trillion won is set aside for physical AI demonstration projects and the state will supply 10,000 graphics processing units for a national AI foundation model, alongside power, water and industrial land for chip plants and a dedicated semiconductor account. Total revenue is projected at 880.8 trillion won, which includes 162.3 trillion won of extra tax receipts attributed to the chip boom. President Lee Jae-myung said the budget should be a foundation for Korea to lead in advanced technology.
The money is financed by a cyclical windfall. Samsung Electronics and SK Hynix are posting record profits on high bandwidth memory sold into AI accelerators, and the Treasury is treating that as durable enough to support a structural rise in spending. Strip out the memory upcycle and the revenue line behind the budget weakens with it.
The plan assumes the upcycle runs through 2027. The National Assembly has not voted, and past budgets have been trimmed in committee. And 10,000 GPUs for a sovereign model is modest next to the quantities a single US lab orders in a quarter, which is the scale Korea says it wants to compete at. The country is spending a chip windfall to stay in the chip race. That works only while the windfall lasts.
