South Korea flags record 2027 budget of over $530 billion as AI chip boom lifts revenues

South Korea said on Monday 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.

($1 = 1,506.6900 won)