Big spend, specific bets
Presenting to the National Assembly, Lee put artificial intelligence and other future growth engines at the center of the 2027 plan. Total outlays would reach 820.9 trillion won, and he said the increase would lead to "virtually no net increase in government debt," with new bond sales used to repay existing debt.
Of that total, 21.3 trillion won is allocated to semiconductors, the hardware side of AI, and AI-focused data centers - almost double the 2026 level. Another 4.7 trillion won targets a sovereign AI model that Lee described as having the "world's highest performance."
People, schools, and industry links
The proposal also leans into talent. It backs programs to train 2,000 experts to "lead semiconductor design and the regional semiconductor industry," and broadens AI instruction aimed at students, job seekers, and current workers.
South Korea has rolled out university "contract departments" that let students join employer-affiliated degree tracks, opening routes to positions with companies such as Samsung Electronics and SK Hynix before they even graduate. Businesses co-design curricula, offer funding, and hire graduates who meet their criteria. The budget also raises social security spending for the youth.
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Growth, trade, and what it means for your portfolio
The record plan lands as the IMF projects that South Korea's economy will expand 3.3% in 2026, the quickest pace since the pandemic-era rebound seen in 2021. That momentum is tied to chips: exports surged 93.7% year over year, hitting a record $115.3 billion in October; as a result, cumulative exports reached $930 billion over the first 10 months of 2026, topping $900 billion for the first time. According to Lee, annual exports could approach $1 trillion, a view he based on strong performance in key areas including semiconductors.
October also delivered a $42.5 billion trade surplus, with imports up 36% year over year to $72.8 billion. Defense spending would climb 8.2% to 73.3 trillion won, and, in Lee's words, "We will rapidly transform into a smart, elite, and powerful military by establishing a hybrid manned and unmanned system based on AI, robots, and drones." In plain English: the budget concentrates firepower on semiconductors and AI - plus the workers and infrastructure behind them - which maps directly to Korea's export engine and the companies in its supply chain.
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