South Korea Plans a Record Budget to Build Its Own Top AI Model

Introduction
South Korea wants to spend big on AI.
President Lee Jae Myung shared a new budget plan on Monday, November 2.
The plan is for 2027.
It is the largest budget in the country’s history.
It puts huge money into AI, chips, and data centres.
It also funds a home-grown AI model.
A sovereign AI model means a model made and controlled in its own country.
What Happened
Total spending would rise 12.8% to 820.9 trillion won.
Won is the money of South Korea.
That total is about $610 billion.
AI, chips, physical AI, and data centres would get 21.3 trillion won.
That is about $16 billion.
It is nearly double the 2026 level.
Physical AI means smart machines that work in the real world.
Think robots and self-driving machines.
A separate 4.7 trillion won would go to frontier AI projects.
Frontier means the most advanced work.
That includes South Korea’s own AI model.
The goal is the world’s highest performance.
Defence spending would rise 8.2% to 73.3 trillion won.
The plan must still pass the National Assembly.
The National Assembly is South Korea’s parliament.
Its deadline is December 2.
Key figures
Total 2027 budget plan: 820.9 trillion won, about $610 billion
Rise from 2026: 12.8%
AI, chips, physical AI and data centres: 21.3 trillion won, about $16 billion
2026 level for those areas: 10.8 trillion won
Frontier AI and home-grown model: 4.7 trillion won
Defence spending: 73.3 trillion won, up 8.2%
Parliament deadline: December 2, 2026
Why It Happened
South Korea is riding a chip boom.
Chips are tiny parts that run computers and phones.
Strong chip sales brought in more tax money.
The government wants to use that money for future growth.
It wants to train 2,000 chip design experts too.
It wants to build chip factories and data centres.
It also wants its own AI model.
Right now, the best models come from a few firms abroad.
South Korea wants more control over its own AI.
That is the idea behind a sovereign model.
Why It Matters
This plan is a bet on the future.
It bets that AI and chips will drive growth for years.
It also bets that public money can speed that growth.
But a budget plan is not yet a law.
Parliament can change it.
It can cut some projects.
It can add others.
The money is also huge.
Critics will ask if it is spent well.
They will ask if buying foreign AI would be cheaper.
Those questions will shape the debate.
What Happens Next
Watch parliament first.
Will it pass the plan by December 2?
Watch which projects survive.
Watch also for news on chip factories.
New factories take years to build.
Watch for news on the home-grown model.
A top model needs chips, power, and skilled people.
All three take time.
Final Thoughts
South Korea is not just watching the AI race.
It is paying to join it at the front.
A record budget shows that intent.
Now parliament must decide if the plan becomes real.
Disclaimer: This article is for educational and informational purposes only and does not constitute financial advice.
Sources: CNBC, https://www.cnbc.com/2026/11/02/south-korea-ai-spending-budget.html ; Aju Press, https://www.ajupress.com//view/20261102111057061 ; Reuters via Asia Daily, https://asiadaily.org/news/17208/
Related post: https://thefinanceclass.wordpress.com/2026/11/01/south-korea-exports-nearly-double-october-ai-chip-demand/