South Korea has proposed a record 821 trillion won ($596.92 billion) budget for 2027, as the country looks to strengthen its position in artificial intelligence, semiconductors and other strategic technologies.
The proposed spending plan represents a 12.8% increase from 2026, making it the largest year-on-year rise in South Korea’s history. The government says the higher spending will help the economy compete in the global AI race while supporting long-term growth.
South Korea Targets AI and Semiconductor Growth
The spending increase is being supported by stronger tax revenues from the country’s semiconductor industry. Samsung Electronics and SK Hynix are benefiting from strong global demand for high-bandwidth memory (HBM) chips, which are widely used in AI systems.
South Korea expects total tax revenue to rise 40.7% to 584.4 trillion won in 2027. Corporate tax revenue is projected to more than double to 216.7 trillion won.
Budget Minister Park Hong-keun said the government plans to use the stronger tax position to make major investments now.
“The government plans to deploy fiscal resources preemptively and expansively, backed by the amplified national tax revenues projected for 2026 and 2027,” Park said.
He added that spending growth would gradually slow after 2028 as investments begin producing economic returns.
Major Investment in Chip Infrastructure
Semiconductors are at the center of South Korea’s 2027 budget strategy. The government has earmarked 2.6 trillion won for a special semiconductor budget.
A further 21.3 trillion won will support industrial water systems, power grids and logistics networks needed to strengthen semiconductor manufacturing and critical technology infrastructure.
The government also plans to create a Future Response Fund, using excess tax revenue for longer-term investments. The fund will deploy 45.4 trillion won in 2027 toward youth welfare, future growth industries and specialised education.
Lower Debt and Strategic Spending
Despite the spending increase, South Korea expects its debt-to-GDP ratio to fall to 48.3%, compared with an estimated 51.6% in 2026.
The proposal also includes 3.4 trillion won for a nuclear-powered submarine programme and other strategic weapons.
The 2027 budget still requires parliamentary approval, but it signals South Korea’s strong commitment to AI investment, semiconductor leadership and future technology development.
