The administration is directing much of its technology funding toward three major initiatives announced in June. These include expanding semiconductor manufacturing capacity, developing large-scale AI data centers, and advancing physical AI technologies such as robotics.
The projects are structured around public-private cooperation, combining government support with investment in industrial facilities, research centers, and computing infrastructure.
“We will make bold investments in AI and future growth engines to boost our economy's growth potential,” Lee told lawmakers.
A separate allocation of approximately 4.6 trillion won is intended to advance South Korea's development of a sovereign frontier AI model. The government wants to create a domestically developed system capable of competing with the world's leading AI models, positioning the technology as a strategic national asset.
The proposal reflects South Korea's effort to build on its existing semiconductor industry while expanding into other areas of AI development.
The country is home to Samsung Electronics and SK hynix, two of the world's three largest memory chip manufacturers. Both companies have benefited from rising demand for the memory components used in AI computing infrastructure.
That demand has also strengthened the government's revenue outlook, with higher tax receipts from the semiconductor industry expected to help finance the broader spending program.
The administration plans to channel some of those revenues into a new Future Fund, valued at approximately 160 trillion won. The initiative is designed to support long-term economic development, younger generations, and investment across different regions of the country.
AI and semiconductor infrastructure projects are among the priorities associated with the fund.
Beyond those investments, the government has proposed 13.8 trillion won for 10 strategic technology sectors intended to diversify future economic growth beyond chipmaking.
Another 2.1 trillion won would support essential industrial infrastructure, including electricity networks, water supplies, and industrial complexes. Those investments are particularly relevant to semiconductor manufacturing, which depends on continuous access to power and other utilities.
The budget also includes a substantial increase in military spending, with defense funding set to reach 73.3 trillion won, approximately 8% above this year's level.
Lee wants to accelerate the adoption of AI, robotics, and drones across the armed forces, including systems that combine human-operated and autonomous military capabilities.
The proposed defense investments also support plans involving nuclear-powered submarines and KF-21 fighter jets.
South Korea's increased emphasis on military technology comes amid continued weapons development in North Korea, which has recently reported testing systems incorporating AI capabilities.
The spending proposal follows an earlier agreement between Seoul and Washington concerning the development of nuclear-powered submarines, an initiative that North Korea has criticized.
For the government, the proposed investments connect industrial competitiveness, domestic AI development, and defense modernization within a single fiscal program.
The semiconductor sector remains central to that strategy, both as a source of economic growth and as a foundation for building additional AI capabilities.
However, the proposed allocations still require parliamentary approval. Lee used his National Assembly address to seek bipartisan support for the 2027 budget, which would significantly increase government spending on AI infrastructure, advanced computing, and strategic technology development.
This analysis is based on reporting from Yahoo Finance courtesy of AFP.
Image courtesy of Yonhap.
This article was generated with AI assistance and reviewed for accuracy and quality.
