South Korea plans 2.6T won budget to support chip industry in 2027

South Korea is preparing to pour 2.6 trillion won into its semiconductor industry as part of a broader 2027 national budget that’s shaping up to be the largest in the country’s history. The allocation is a cornerstone of President Lee Jae Myung’s strategy to turn a temporary boom in chip-related tax revenues into permanent industrial infrastructure.

The overall 2027 budget is projected to exceed 800 trillion won, roughly $530 to $592 billion. That represents a 10-12% jump from the 2026 baseline of 729.9 trillion won, with the budget proposal advancing toward approximately 820 trillion won in total spending as of August 2026.

Windfall economics, Seoul-style

The projected combined operating profits of Samsung and SK Hynix in 2026 exceed 600 trillion won, a figure that has flooded government coffers with revenue that policymakers recognized couldn’t be treated as a permanent baseline.

Their solution is a new mechanism called the “Future Response Fund,” designed to channel excess semiconductor-related tax revenues into long-term growth investments rather than letting them inflate recurring spending commitments. The fund backs three priority areas: semiconductor manufacturing, AI data centers, and what the government is calling “physical AI” projects.

Mega-projects and mega-commitments

On June 29, 2026, Seoul launched three mega-projects that collectively involve commitments of roughly 800 trillion won, or about $518 billion. The investments, backed by Samsung Electronics, SK Hynix, and regional governments, target four new memory fabrication plants along with packaging hubs spread across the country.

The ambition is blunt: double South Korea’s memory chip production capacity within five years.

The AI data center component is equally significant. Plans call for an initial 8.4 GW phase of data center capacity backed by approximately 550 trillion won in investment. Regional governments, including Gwangju in the southwest, are participating in the buildout.

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