South Korea Reveals $610B 2027 Budget With $4.7B for Sovereign AI Model

South Korean President Lee Jae Myung announced the country's largest budget ever for 2027, set at 820.9 trillion won ($610.14 billion). This represents a 12.8% increase from the previous year. The budget allocates 21.3 trillion won for semiconductors, physical AI, and AI data centers, nearly doubling the funding compared to 2026. Additionally, 4.7 trillion won is earmarked for developing a sovereign AI model described as having the world's highest performance.

The government plans to invest heavily in talent development by training 2,000 specialists for semiconductor design and regional industry growth. AI education will be expanded across students, job seekers, and current workers. University programs linked with companies such as Samsung Electronics and SK Hynix offer degrees and job pathways before graduation, supported by industry involvement. Defense spending will rise 8.2% to 73.3 trillion won, focusing on hybrid manned and unmanned military systems with AI, robots, and drones.

South Korea’s economy is forecasted to grow 3.3% in 2026, the fastest since 2021, driven largely by semiconductor exports. Semiconductor exports surged 93.7% year on year in October to a record $115.3 billion. Total shipments reached $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. The budget increase is designed to maintain strong export growth without significantly increasing government debt.

This budget shows South Korea’s strategic commitment to AI and semiconductor industries with significant funding and talent development. The $4.7 trillion investment in a sovereign AI model underscores the focus on domestic AI leadership. Investors should watch how effectively these funds drive export growth and innovation, impacting South Korea’s economic and trade performance.