South Korea plans to nearly double AI spending to 21.3 trillion won

The 21.3 trillion won allocation is a 97.2% jump from the 10.8 trillion won ($7.8 billion) spent in 2026. The plan is central to President Lee Jae-myung’s push to secure the country’s place in a global AI race.

The spending is organized around three flagship projects: semiconductors, physical AI, and domestic AI data centers. Physical AI refers to AI that operates in the real world through machines like robots, rather than living only inside a chatbot window.

Hardware and infrastructure

The single biggest line item is hardware. The budget earmarks 4.7 trillion won to buy 10,000 next-generation GPUs for sovereign AI models. This is part of a broader 2.1 trillion won allocation for infrastructure development.

The plan also includes 500 billion won for the AI data-center ecosystem support. A separate 250 billion won is set aside for a free public AI service.

Private investment

The government is not spending alone. Korean industry giants have committed more than 800 trillion won in new investment for semiconductor fabrication and 550 trillion won for AI data center construction.

Put those numbers next to the 21.3 trillion won public budget and the picture shifts. The state’s role looks less like sole financier and more like the catalyst, the entity that de-risks infrastructure and buys strategic capacity so companies can build at scale.

Next steps

The Cabinet approved the proposal on September 1, 2026, and it has been submitted to the National Assembly for deliberation. The next checkpoint is the National Assembly, where lawmakers will debate the proposal and the final figures could shift before the budget takes effect.