AI chip boom powers South Korea’s record budget

South Korea said it would draw up record budget ​spending of more than 800 trillion won ($530.97 billion) for ‌fiscal 2027, supported by stronger tax revenues from the booming AI chip industry.

Budget Minister Park Hong-keun, speaking at a national fiscal strategy ​meeting, said the spending plan would be financed through ​higher tax receipts and expenditure cuts. The proposed budget ⁠compares with this year’s 727.9 trillion won spending plan, ​excluding supplementary budgets.

The government said three “mega-projects” — investments in chips, AI ​data centres and physical AI — would receive top fiscal priority, adding that it would secure funding capacity through a major restructuring of existing spending ​programmes, rather than relying solely on increased tax revenue.

President ​Lee Jae Myung said the government would use all available means to ‌ensure ⁠that corporate investments proceed on schedule.
“Additional tax revenue coming at this time is a precious resource to be used at a golden time when global AI dominance will be determined,” ​Lee said.

Budget Minister ​Park said ⁠the government would seek to restructure about 50 trillion won in spending, twice the level of ​the previous year, through a review of ​discretionary and ⁠mandatory expenditures and cuts to underperforming programmes.

South Korea plans to launch a Future Response Fund as a strategic investment platform, ⁠setting aside ​tax revenue that exceeds long-term trends ​and investing it in four areas: youth, growth engines, regions and talent, the ​government said. Reuters