Government to invest 12 trillion won in public AI and proprietary model development, 340 billion won in semiconductors, 200 billion won in infrastructure [2027 budget bill]

The government will inject 21.3 trillion won next year to fully support the Three Mega-Projects and the artificial intelligence (AI) sector.
The government reviewed and approved the 2027 budget bill at a State Council of South Korea meeting on the 1st. Under the plan, it will create a new Special Account worth 2.6 trillion won for the semiconductor sector among the Three Mega-Projects to build a stable investment base, and allocate 1.5 trillion won to integrated fiscal support for the southwestern semiconductor cluster.
It also plans to spend 20 billion won on technology development that integrates and optimizes domestically developed neural processing units (NPUs) with AI models and services, with the aim of improving the practical use of K-AI semiconductors. In addition, it will establish a collaborative R&D fab for compound semiconductor prototype production and demonstration, backed by private-sector co-investment and 48 billion won in state funds.
A total of 3.1 trillion won will be invested in Physical AI, with field demonstrations supported across eight key sectors.
To foster a domestic AI Data Center (AIDC) industrial ecosystem, the government will build a new test lab worth 66.8 billion won to verify the performance of key AIDC components and support promising companies with commercialization through export information and consulting, backed by 21 billion won. It will also pursue new R&D investment of 154.5 billion won to improve the performance of materials, parts and equipment for AIDC servers, power systems and cooling.
The government also decided to provide full support for building core infrastructure, including power, water and industrial complexes. To ensure fast and stable electricity supply to new semiconductor industrial sites, it will make preemptive investments of 88.1 billion won in power infrastructure, including underground transmission networks and high-voltage substations, and support grid stabilization worth 610.8 billion won, including the construction of Energy Storage System (ESS) facilities at transmission and distribution sites. To reinforce funding for power grid investment, it plans to inject 500 billion won into Korea Electric Power Corporation (KEPCO), raising its capital from 3.2 trillion won to 3.7 trillion won.
For water supply to industrial complexes in the southwestern and Chungcheong regions, it will expand water supply and water resource facilities with 127.7 billion won, and plans to inject 250 billion won into Korea Water Resources Corporation (K-water) to strengthen investment funding. It also plans to build long-term lease land and a shared logistics center for 200 billion won in Saemangeum advanced industry infrastructure.
The government will also push ahead with the development of a frontier-level proprietary AI model. To this end, it plans to purchase 10,000 top-tier graphics processing units (GPUs), based on the NVIDIA Vera Rubin platform, for 3.9 trillion won, along with 800 billion won worth of AI training data. To respond to cyber threats, it will develop a proprietary AI security model worth 70 billion won, and it will also develop public AI services worth 250 billion won.