South Korea triples AI funding, raises defence budget for 2026

November 04, 2025 / 8:54 AM

Sharjah24-AFP: South Korean President Lee Jae Myung announced on Tuesday that his government will triple spending on artificial intelligence (AI) and implement the largest defence budget increase in six years, as part of a comprehensive ₩728 trillion ($510 billion) national budget proposal for 2026.

Addressing parliament, President Lee announced ₩10.1 trillion ($7 billion) will be dedicated to AI development, positioning South Korea among the top three AI nations alongside the United States and China. The new budget is more than three times the country’s current AI-related expenditure, signalling a decisive step to boost innovation and digital transformation across industries.

Transforming South Korea into an AI powerhouse

President Lee said the government’s investment will transform South Korea into one of the top three global AI powers. Of the AI budget, ₩2.6 trillion will fund AI integration in public and private sectors, with ₩7.5 trillion for talent development and infrastructure, including data centres and research hubs. South Korea has giants like Samsung Electronics and SK hynix producing memory chips vital for AI. Nvidia CEO Jensen Huang plans to supply 260,000 advanced chips to Korea, stating, “There’s no reason why Korea cannot achieve it — you have the technology, you have the software expertise, and the manufacturing capacity.”

Record increase in defence spending

The budget includes an 8.2% increase in defence spending to ₩66.3 trillion ($46 billion), the largest since 2019. Lee said, “We will modernise weapons for the AI era and transform our military into an elite, smart force.” This shows the government’s plan to incorporate AI into defence, boosting cybersecurity, surveillance, and autonomous systems. President Lee noted South Korea's defence spending exceeds North Korea’s GDP by 1.4 times and ranks fifth in global military strength. The country hosts about 28,500 US troops, under a long-standing alliance.

Economic and political context

President Lee’s 2026 budget proposal is ₩728 trillion, an increase of 8.1%, and is likely to pass easily since his party holds a majority. Since June, Lee has adopted a balanced approach to North Korea, pledging to respect Pyongyang’s system and pursue dialogue without preconditions, moving away from his predecessor’s confrontational policies. His administration prioritises AI and defence modernisation as essential for growth and security, aligning technology with geopolitical resilience amid global tensions and rapid digital advancement.