The South Korean government announced that it will compile a record budget for the 2027 fiscal year exceeding 80 trillion won (approximately 3.6 trillion Chinese yuan), with the main source of funding coming from tax growth driven by the booming AI chip industry. Compared to the 727.9 trillion won fiscal expenditure plan for the 2026 fiscal year, the increase is significant. Park Hong-geun, Minister of Planning and Finance, stated at the National Fiscal Strategy Conference that this budget will be funded through increased tax revenue and reduced fiscal spending.

Three Super Projects Become Priority Areas

The South Korean government clearly stated that three "super projects"—semiconductors, AI data centers, and physical AI—will be the top priority for fiscal investment. President Yoon Suk Yeol said the government will take all feasible measures to ensure corporate investment projects proceed as planned, and emphasized that the newly generated tax revenue is a valuable resource that should play a role during the critical period when the global AI dominance competition is about to determine the outcome.

In terms of funding, South Korea plans to cut projects with poor performance by conducting a comprehensive review of discretionary and mandatory expenditures, reorganizing about 50 trillion won (approximately 225.3 billion Chinese yuan) in fiscal spending, which is about twice the amount of the previous year. The government will free up funds by making large-scale adjustments to the existing fiscal spending structure, rather than relying solely on increased tax revenue.

Establishing a Future Response Fund

The South Korean government also announced the establishment of a "Future Response Fund" as a strategic investment platform, allocating the newly generated tax revenue above the long-term trend level separately to focus on four key areas: youth, future growth engines, regional development, and talent cultivation. This initiative aims to convert the benefits of the AI industry into long-term national competitiveness and gain an advantage in the layout of future industries in South Korea.