Industry ministry seeks record budget to fund manufacturing AI transition, megaprojects

On September 1, South Korea's industry ministry unveiled a landmark 13.26 trillion won ($9.6 billion) budget proposal for the upcoming year to fuel artificial intelligence adoption in manufacturing and to finance major development projects. This represents a substantial 40.5% increase from the current year's allocation of 9.43 trillion won.

The primary focus of the budget is on bolstering AI technologies in manufacturing, alongside the government's three-pronged megaproject initiative and a commitment to balanced regional development. The ministry has significantly bolstered funding for the Manufacturing AI Transition (M.AX) program, as well as for the three megaprojects centered around semiconductors, AI data centers, and physical AI.

A substantial portion of the budget, 8.31 trillion won, will be allocated to non-research and development (R&D) programs, marking an impressive 97.1% increase compared to last year. Meanwhile, R&D programs will receive 4.94 trillion won, a slight 5.2% decrease from the previous year. The manufacturing AI transition and the three major projects will be funded with 3.73 trillion won, while 2 trillion won will be designated for companies investing in facilities outside the Seoul metropolitan area.

In an effort to mitigate risks associated with global supply chain disruptions in petroleum and critical minerals, the ministry has allocated 3.68 trillion won, a marked 84.5% increase from the previous year. Additionally, the ministry plans to cut 1.5 trillion won from low-growth and less efficient programs, redirecting the funds towards the key projects highlighted in the budget proposal.