# South Korea Proposes $1.9B for Chips in Record 2027 Budget > Source: > Published: 2026-09-02 20:40:26+00:00 South Korea is betting big on chips, proposing 2.6 trillion won (approximately $1.9 billion) in semiconductor funding as it races to stay competitive in the global AI economy. The allocation is part of South Korea’s proposed 2027 government budget of approximately 821 trillion won (approximately $597 billion), a 12.8% increase from this year and the largest annual spending increase in the country’s history, according to Reuters. The Cabinet approved the proposal on Sept. 1 and was expected to submit it to the National Assembly on Sept. 3. Total revenue is projected at 880.8 trillion won (approximately $641 billion), including 584.4 trillion won (approximately $425 billion) in national tax receipts, helped by strong corporate and income tax collections. Much of that revenue boost is tied to [the semiconductor industry](https://www.techrepublic.com/article/news-south-korea-semiconductor-fund-chip-suppliers/). Samsung Electronics and [SK Hynix have benefited from strong global demand](https://www.techrepublic.com/article/news-sk-hynix-trillion-ai-memory-chip-rally-apac/) for high-bandwidth memory chips used in AI systems. The proposed 2.6 trillion won (approximately $1.9 billion) semiconductor allocation adds another layer to South Korea’s broader effort to strengthen its chip industry. The wider proposal also includes 21.3 trillion won (approximately $15.5 billion) for industrial water systems, power grids and logistics networks supporting semiconductor manufacturing and other critical technologies,[ Reuters reported](https://www.reuters.com/world/asia-pacific/south-koreas-president-lee-says-interest-rate-rise-is-unavoidable-2026-09-01/). The infrastructure spending suggests [Seoul is looking beyond chip factories themselves](https://www.techrepublic.com/article/news-nvidia-south-korea-ai-chips/). Reliable power, water and transportation are increasingly important as semiconductor plants become larger and more resource-intensive. President Lee Jae Myung said the budget should help the country respond to rapid technological changes. “Against the backdrop of these sweeping changes, next year’s budget should serve as a solid foundation for Korea to emerge as a global leader in cutting-edge technologies,” Lee said, [according to SCMP](https://www.scmp.com/news/asia/east-asia/article/3365922/south-korea-sets-record-us600-billion-budget-backed-chip-windfall). ### More must-read AI coverage - [SS&C Intralinks DealCentre AI vs. Datasite: Which platform is built for the future of dealmaking?](https://www.techrepublic.com/article/dealcentre-ai-vs-datasite/) - [SS&C Intralinks FundCentre AI vs. Juniper Square: Which platform better supports modern private markets fund managers?](https://www.techrepublic.com/article/fundcentre-ai-vs-juniper-square/) - [Why Data, Not Models, Determines AI Success](https://www.techrepublic.com/sponsored/why-data-not-models-determines-ai-success/) - [The Rise of the AI-Native Factory: How Physical AI Is Transforming Manufacturing](https://www.eweek.com/a/artificial-intelligence/the-rise-of-the-ai-native-factory-how-physical-ai-is-transforming-manufacturing/) ## Turning a chip windfall into long-term investment South Korea is also creating a 162.3 trillion-won (approximately $118.3 billion) Future Response Fund using tax revenue above the past decade’s trend. The fund will direct 45.4 trillion won (approximately $33.1 billion) toward youth support, growth industries, regional development and education, while 12.5 trillion won (approximately $9.1 billion) will help reduce new government bond issuance, [according to Korea Pro](https://koreapro.org/2026/09/south-koreas-record-2027-budget-puts-semiconductor-windfall-to-work-now/). The strategy would allow Seoul to invest unusually strong semiconductor-linked tax receipts without assuming the surge will last indefinitely. For enterprise technology buyers, sustained investment in South Korea’s chip industry could help strengthen supplies of high-bandwidth memory and other components used in AI servers. However, weaker chip demand could reduce future tax receipts while leaving the government with longer-term spending commitments. **Read more: SK hynix is investing $38 billion in new memory plants as AI demand puts pressure on South Korea’s semiconductor production capacity.**