South Korea's President Lee Jae Myung announced a record 820.9 trillion won ($610.14 billion) budget for 2027, a 12.8% increase from 2026 spending.
The budget allocates 21.3 trillion won for semiconductors, physical AI, and AI data centers, nearly double the 2026 level. An additional 4.7 trillion won will fund development of a sovereign AI model Lee described as having the "world's highest performance."
The government plans to train 2,000 specialists in semiconductor design and expand AI education across universities, job seekers, and workers. South Korea has established university "contract departments" where students enroll in company-linked degrees offering job pathways at firms like Samsung Electronics and SK Hynix before graduation.
Lee said the higher spending would produce "virtually no net increase in government debt," with newly issued bonds used to repay existing debt. Defense spending will rise 8.2% to 73.3 trillion won.
South Korea's semiconductor exports surged 93.7% year over year to a record $115.3 billion in October. Shipments totaled $930 billion in the first ten months of 2026, surpassing the $900 billion mark for the first time. The country posted a $42.5 billion trade surplus in October.
Lee said South Korea was within reach of $1 trillion in annual exports.