South Korea President Lee Pledges AI and Chip Funding

South Korean President Lee Jae Myung announced a proposal to invest 21.300 trillion won in artificial intelligence and core technology sectors next year, doubling current spending to strengthen national economic competitiveness. The funding targets three megaprojects spanning semiconductors, physical AI, and data centers as part of an unprecedented 820.900 trillion won public budget.

Future Response Fund Uses Chip Tax Revenue for Spending

The proposed public spending marks a 12.8 percent increase from the previous year, designed to capture a decisive advantage in the global technology race. Much of this financial push relies on a newly established Future Response Fund worth 162.300 trillion KRW.

The fund draws its capital directly from higher tax revenues generated by the ongoing boom in advanced memory chips. Government planners intend to deploy this reserve across regional development, education, youth support, and high-growth industries.

International organizations and major ratings agencies view these fiscal adjustments favorably. Next year’s budget deficit is projected to drop to 0.1 percent of gross domestic product, marking the lowest level in two decades. At the same time, the national debt-to-GDP ratio is set to fall from 51.6 percent to 48.3 percent.

Export Milestones and The Push for Broad Growth

South Korea’s export economy has surged ahead on the back of soaring global demand for advanced memory semiconductors produced by domestic giants Samsung Electronics and SK Hynix. Strong chip investments and high foreign shipments drove third-quarter economic growth past initial forecasts.

Export totals between January and October reached 930 billion USD. The country remains on track to cross the 1,000 billion USD threshold for annual exports, joining the United States, China, and Germany as the fourth nation worldwide to achieve the milestone.

President Lee acknowledged these economic gains during his parliamentary address but cautioned that the resulting wealth remains unevenly distributed. Dobbiamo passare da una crescita per pochi, in cui opportunità e benefici sono concentrati in determinate regioni, classi sociali e in un numero ristretto di aziende, a una crescita per tutti, Lee stated, calling for a deliberate pivot toward inclusive economic participation.

Private Chip Investments May Prompt Sovereign Credit Rating Upgrade

State-backed initiatives are running parallel to massive private sector commitments. Samsung and SK Hynix are spearheading an 800 trillion KRW private investment plan focused on chips and physical infrastructure in the country’s south-western regions.

Kim Jin-wook, an economist at Citi, released a report indicating that favorable fiscal metrics could prompt Fitch Ratings to upgrade South Korea’s sovereign credit rating from “AA-” to “AA” in the coming years.

Citi’s analysis projects that total financing sources for the Future Response Fund will peak at 215 trillion KRW between 2026 and 2027. This capital injection is expected to bolster both long-term potential growth and overall fiscal sustainability as global competition in artificial intelligence intensifies.

More on this story: South Korea Unveils Record 2027 Budget with Massive AI and Semiconductor Investments · South Korea's GDP Grows 1.0% in Q3 Driven by Semiconductor Exports

More on South Korea: OpenAI CEO Sam Altman Visits Samsung in South Korea for AI Chip Talks · SK Hyper seeks funding for 15GW South Korea data centers, says Bloomberg · US and South Korea Delay Security Dialogue Over OPCON Transition