Korea sets $15.6 billion budget for chips and AI initiatives in 2027
The total 2027 budget stands at 820.9 trillion won ($60.5 billion), a 12.8 percent on-year increase, with the Ministry of Climate, Energy and Environment's budget set to an all-time high of 25.73 trillion won.
From left: SK Group Chairman Chey Tae-won, President Lee Jae Myung and Samsung Electronics Executive Chairman Lee Jae-yong join hands after agreeing to invest $520 billion in four new chip plants at the Blue House in Jongno District, central Seoul, on June 29.
NEWS1
The Korean government earmarked 21.3 trillion won ($15.6 billion) in its 2027 budget for major semiconductor and AI-powered data center initiatives, of which 1.9 trillion won will be funneled from the Environment Ministry to develop water and power infrastructure for four yet-to-be-built chip factories.
The government unveiled the budget’s details on Tuesday.
The country's total 2027 budget stands at 820.9 trillion won, up 93 trillion won, or a 12.8 percent on-year increase, with the Environment Ministry’s budget set to an all-time high of 25.73 trillion won.
Of the ministry’s 1.94 trillion won specifically dedicated to semiconductor projects, roughly 1.55 trillion won will be allocated to the four upcoming chip fabs’ power infrastructure, and 386.2 billion won to their water supply.
As part of the country’s three “megaprojects” to advance national competitiveness, Korean chip giants Samsung Electronics and SK hynix will construct four large-scale facilities in the Honam region, which encompasses the Jeolla provinces and Gwangju.
Concerns have been mounting about how the two would supply the necessary power, as powering the four plants would require about 6.3 gigawatts, equivalent to the output of four or five Korean-model nuclear reactors.
The Environment Ministry plans to allocate 572.4 billion won to building transmission-side energy storage systems, or ESS, and 65.8 billion won to establishing substations in regions outside the greater Seoul area, where power supply conditions are relatively weak, to support balanced regional development. The substations will develop electricity infrastructure in advance in locations likely to attract new power demand.
To ensure the timely build-out of power grids, some of the budget will go to expanding the undergrounding of new transmission lines and installing shared grid-connection facilities for offshore wind projects.
The ministry will also dedicate 119.6 billion won to water supply, including expanding Dongbok Dam, and an additional 8.5 billion won to treat public wastewater generated by the semiconductor industrial complex in Honam.
Its EV subsidy budget for 2027 has risen to 2.14 trillion won, up 32.8 percent from the previous year. Currently, around 300,000 EVs receive the subsidies, but that number is expected to rise to 430,000 by next year.
The ministry will also offer subsidies to commercial vehicles such as taxis for the first time and increase those for electric delivery motorcycles from 10 percent this year to 50 percent of the purchase cost.
Meanwhile, its 2027 funds for renewable energy have more than doubled on year to 1.5 trillion won. Loans for factory rooftop solar installations have also risen nearly 4.4-fold to 544 billion won from 122.9 billion won, with the capacity increasing from 116 megawatts to 512.
Additionally, the Ministry of Trade, Industry and Resources plans to invest 1.5 trillion won to support the chip project in Honam. The ministry’s 2027 budget has been set to a record 13.26 trillion won, an increase of 40.5 percent from this year’s.
Major semiconductor support programs will receive stable funding beginning next year through a newly created semiconductor special account. Of that account’s governmentwide total of 2.6 trillion won, the Industry Ministry will receive 2.1 trillion won.
Spending to strengthen the country’s response to global supply chain risks involving oil, critical minerals and other resources is expected to rise 84.5 percent to 3.68 trillion won in 2027. Of that, 328.7 billion won will go toward petroleum reserves, and 42.5 billion won toward diversified crude-refining facilities.
The Industry Ministry will also establish a “resource security fund” worth 1.4 trillion won to strengthen its response capacity and secure stable supply chains for resources such as oil and critical minerals essential to Korean industry.
Separately, Korea will spend 65.9 billion won on tourism promotion, seeking to shift more of the current traffic — over 70 percent of which is concentrated in the greater Seoul area — toward the regions.
The 2027 budget is scheduled to be submitted to the National Assembly on Monday, after which standing committees and the Special Committee on Budget and Accounts will review it before passing it on to a plenary session.
BY SARAH CHEA [[email protected]]
