The South Korean government has announced plans to spend 821 trillion won ($596.92 billion) in 2027, including plans to reinvest semiconductor profits into improving Korea’s competitiveness in AI and advanced technologies.

South Korea will spend 21.3 trillion won ($15.5 billion) on AI projects in 2027, almost double the 10.8 trillion won ($7.8 billion) it spent in 2026. Much of this is expected to go towards megaprojects such as semiconductors and AI data centres, intended to shore up South Korea’s domestic AI strength.

The spending will also include 2.6 trillion won ($1.8 billion) on special semiconductor projects, such as power, water, and industrial complexes to support domestic AI.

Park Hong-geun, budget minister in the South Korean government, told press that South Korea will ramp up production capacity for advanced AI chips and aim to drive more AI innovation from within the country.

“We will supply 10,000 graphics processing units, plus data and workers to help a national AI foundation model achieve globally competitive performance and develop AI services for the public,” he said, per the Korea Times.

Yonhap News Agency separately reported that Park said the spending plans will deliver tangible results and “serve as a blueprint for South Korea's future amid intensifying global competition in the AI sector”.

"The valuable tax revenue generated by the semiconductor boom will be strategically invested to drive innovation across the country's economic and social systems, breaking away from existing frameworks," he added.

South Korea is reaping massive windfalls from its domestic chip giants Samsung Electronics and SK Hynix. In July, Samsung Electronics reported an 1,800 per cent year-on-year increase in second-quarter profit to 89.5 trillion won ($62 billion).

In total, the government projects tax revenue will reach 584.4 trillion won ($425.3 billion), a rise of 40.7 per cent.

It has previously announced plans to double down on its domestic strengths with $576 billion in targeted investment to expand chip facilities in the city of Gwangju and across the South Jeolla region. Under the plans, Samsung and SK Hynix will invest a combined 800 trillion won ($518.30 billion).

In August, Seoul announced it would funnel excess tax revenue into a fund for youth projects, childbirth, and housing programmes called the Future Response Fund.

The government expects the fund to be worth 162.3 trillion won ($118.1 billion) in 2027, of which 45.4 trillion won ($33 billion) will be spent.

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