South Korea’s government has revealed an 8% increase in its budget for 2026 to expand investment in artificial intelligence (AI). It’s the highest rise in government expenditure in four years as the country struggles to keep pace with AI developments in China and the United States.
While revealing the increase in its annual spending, the Ministry of Economy and Finance (MOEF) projected expenditure to hit KRW738 trillion ($530 billion). The Asian nation intends to restructure some of its low-priority programs and redirect the money to critical digital infrastructure, with AI ranking at the top of the agenda.
The new plan, which was approved by the Cabinet on August 29, now heads to the National Assembly for its approval. With the Democratic Party and its allies commanding a clear majority in the legislature, the budgetary plan is expected to sail through.
Finance Minister Koo Yun-cheol said in a news conference that the budget allows Korea to invest in AI infrastructure that enables it to compete with leading AI hubs globally.
“We are now in the era of an AI transformation, and if we fall behind in so-called ‘physical AI,’ we will have no future. That is why next year’s budget is larger in scale, with more aggressive restructuring than in previous years,” he stated.
Direct investment in AI will skyrocket by more than 300% in 2026, with the government setting aside KRW10.1 trillion ($7.25 billion) for the sector. A quarter of this will specifically target pushing AI adoption in both the public and private sectors.
Another $5.4 billion will be channeled to expanding AI infrastructure, from purchasing an additional 15,000 graphics processing units (GPUs) to training at least 11,000 South Koreans in 24 graduate schools. AI startups will receive $270 million to supercharge growth.
In general, the “super-innovation economy,” which includes AI and other emerging technologies, will get KRW72 trillion ($52 billion) in 2026.
“This budget, which combines investment and spending reform, is not just a one-year plan but a roadmap for national policy over the next five years. We allocated most of the increased budget to R&D, AI and advanced industries, which will boost the nation’s growth potential in the future,” the minister added.
The increased spending comes at a cost; Korea’s debt-to-GDP ratio has now risen above 50% for the first time as President Lee Jae Myung’s government diverges from his predecessors’ fiscal tightening approach.
The budgetary allocations are the latest efforts by South Korea to keep up with rapid innovations in AI as the U.S. and China continue to dominate. Earlier this week, the Cabinet approved a new National AI Strategy Committee to steer President Lee’s AI agenda. It consists of 50 members, pooled from government ministries and agencies and the private sector.
South Korea has also tasked its leading tech firms—from Samsung and SK Telecom to Naver and startups like Rebellion—with developing a national AI model to compete with global industry leaders.
Korea Western Power rebrands digital center to focus on AI
While the government increases budgetary spending in the AI sector, one of the country’s largest power producers has rebranded its digital center to facilitate AI development.
Korea Western Power announced this week that it had rebranded its Digital Technology Sharing Center into the AX Innovation Center. With the rebrand, the center will now expand beyond being a platform where companies cooperate on developing frontier technologies to an AI-focused center supporting companies across the entire AI pipeline, from ideation and development to demonstration and commercialization.
Western Power is a subsidiary of Korea Electric Power Corporation (Kepco), the country’s largest electric company, with over 95% coverage.
“AX Innovation Center is a real growth model that helps private companies solve problems by providing abundant technology and information to realize growth and commercialization at the same time through open innovation,” the company’s president, Lee Jung-bok, commented.
According to local reports, over 30 AI startups have partnered with Western Power, and in 2024, their sales shot up by $27 million.
While it currently accounts for a small share of the electricity consumed by data centers, AI’s power demand is skyrocketing. Research indicates that in the U.S., AI could consume as much power as a quarter of all households by 2028.
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Source: https://coingeek.com/south-korea-boosts-ai-funding-with-biggest-hike-in-4-years/
