South Korea plans to triple its investment in artificial intelligence (AI) and implement its largest defence budget hike in six years, President Lee Jae Myung announced Tuesday during his annual address to parliament on the 2026 national budget.
Lee revealed that 10.1 trillion won ($7 billion) will be allocated to AI initiatives as part of what he called “a major transformation to place South Korea among the world’s top three AI powers,” alongside the United States and China.
“We will dramatically expand investment to usher in the true ‘AI era’,” the president said, noting that the new allocation is more than three times the current year’s AI spending.
The overall proposed budget stands at 728 trillion won, reflecting an 8.1% increase from this year. With Lee’s party holding a parliamentary majority, the proposal is expected to pass.
On defence, the government is seeking an 8.2% increase to 66.3 trillion won, marking the biggest rise since 2019.
“We will modernise traditional weapon systems into advanced, AI-driven platforms and transform our forces into a smart, elite military,” Lee added.
AI infrastructure
Of next year’s AI budget, 2.6 trillion won “will be invested in introducing AI across industry, daily life and the public sector, while 7.5 trillion won will go towards talent development and infrastructure building”, Lee said.
South Korea is home to two of the world’s leading memory chip makers, Samsung Electronics and SK hynix.
The two tech giants manufacture chips essential for AI products and the power-hungry data centres that the fast-evolving industry relies on.
Jensen Huang, the CEO of US chip titan Nvidia, announced last week plans to supply 260,000 of the firm’s most advanced chips to South Korea.
After the announcement on Friday, Huang described that goal as “ambitious”.
But, he said, “there’s no reason why Korea cannot achieve it — you have the technology, you have the software expertise and you also have a natural ability to build manufacturing plants”.
The US, a key military ally, stations about 28,500 troops in South Korea to help it fend off military threats from the North.
Since taking office in June, Lee has vowed to “respect” North Korea’s political system and pursue dialogue without preconditions, in a sharp break with the policies of his hawkish predecessor.
Lee noted on Tuesday that South Korea already spends “1.4 times North Korea’s annual GDP” on defence alone and is “ranked fifth in global military strength”.
Seoul and Pyongyang technically remain at war as the 1950-53 Korean War ended in armistice, not a peace treaty.
