South Korea’s Lee vows to make bold AI investment in record budget push

Seoul, South Korea - South Korean President Lee Jae Myung pledged on Monday to make significant investments in artificial intelligence (AI) during his address to parliament, requesting approval for next year's budget. According to Lee, the government intends to allocate 21.3 trillion won ($15.97 billion), nearly double the current year's expenditure, towards AI alongside the development of semiconductors, physical AI, and AI data centers.

In September, the administration had proposed a record 12.8% increase in government spending to 820.9 trillion won ($615.62 billion) for the upcoming year, aiming to enhance South Korea's technological edge amid growing global competition in AI.

The surge in South Korea's economy has been primarily driven by demand for advanced chips utilized in AI, resulting in increased exports and profits for memory chip manufacturers like Samsung Electronics and SK Hynix. As Asia's fourth-largest economy, South Korea experienced faster-than-anticipated growth in the third quarter due to chip exports and investments, with total exports reaching $930 billion from January to October, putting the nation on track to surpass the $1 trillion mark this year.

This would position South Korea as the fourth country globally to achieve this milestone, following the United States, China, and Germany.

While Lee expressed optimism about the nation reaching an annual export value of $1 trillion, he cautioned that the benefits of growth were not being distributed equitably. The president urged for a transformative shift from "growth for the few," where opportunities and gains are concentrated among specific regions, classes, and a limited number of businesses, to "growth for all."

To support growth industries, young individuals, regional development, and education, alongside mitigating potential revenue shortfalls, the budget incorporates a 162.3 trillion won Future Response Fund, primarily financed through additional tax revenue generated by the semiconductor boom. Simultaneously, South Korea is undertaking nationwide megaprojects focused on chips, physical AI, and data centers, including an 800 trillion won private sector chip buildout spearheaded by Samsung and SK Hynix in the southwestern region of the country.