Lee pledges bold AI spending in South Korea's record budget

what happened

South Korean President Lee Jae Myung told parliament on Monday that his government will put 21.3 trillion won ($15.97 billion) into artificial intelligence and three large projects covering chips, physical AI and data centres, almost double this year's level. He made the remarks while asking lawmakers to approve next year's budget, according to Reuters.

In September the administration proposed a record 12.8% rise in state spending for next year, to 820.9 trillion won ($615.62 billion), as rival nations race to lead in AI. Export earnings have been lifted by demand for advanced AI chips, which has helped Samsung Electronics and SK Hynix. Shipments abroad reached $930 billion from January through October and could pass $1 trillion this year, which would make Korea the fourth nation to do so after the US, China and Germany. Lee acknowledged that gains have flowed to a narrow group of regions, social classes and firms.

why it matters

The budget includes a 162.3 trillion won Future Response Fund, mostly financed by extra tax income from the chip boom, meant to back growth sectors and cushion against revenue shortfalls. For markets, it signals sustained state support for chipmakers and AI infrastructure, while underlining how heavily the economy depends on the semiconductor cycle.

market impact

Samsung Electronics, SK Hynix: state AI spending supports chip demand

• ▲Samsung Electronics pressure up — state AI spending supports demand for its memory and advanced chips
• ▲SK Hynix pressure up — state AI spending supports demand for its memory and advanced chips

tags

instruments