South Korea proposes record 13.26 trillion-won budget for manufacturing AI and industrial development

SEOUL, Sept. 1 (Yonhap) -- South Korea's industry ministry said Tuesday it has proposed a record 13.26 trillion-won (US$9.6 billion) budget for next year to support the adoption of artificial intelligence (AI) in manufacturing and fund major development projects.

The 2027 budget proposal submitted to the National Assembly calls for spending of 13.26 trillion won, up 40.5 percent from this year's 9.43 trillion won, the Ministry of Trade, Industry and Resources said in a press release.

The proposal focuses primarily on supporting the adoption of AI technologies in manufacturing, the government's three-pronged "megaproject" initiative and balanced regional development, the ministry said.

"The ministry has significantly increased funding for the manufacturing AI transition (M.AX), three megaprojects focusing on semiconductors, AI data centers and physical AI, as well as subsidies for companies making large-scale facility investments in local provinces," a ministry official said.

Of the total budget, 8.31 trillion won will be allocated to non-research and development (R&D) programs, up 97.1 percent from a year earlier, while 4.94 trillion won will go to R&D programs, down 5.2 percent from the previous year.

Some 3.73 trillion won will be allocated to the manufacturing AI transition and the three major projects unveiled in June, while 2 trillion won will be earmarked for companies planning facility investments in regions outside the Seoul metropolitan area.

To better respond to disruptions in global supply chains for petroleum and critical minerals, the ministry said it will allocate 3.68 trillion won, up 84.5 percent from a year earlier.

The ministry also plans to cut 1.5 trillion won from low-growth and less efficient programs and redirect the funds to the key projects outlined above.