President Lee Jae Myung presented the budget to the parliament in the annual parliamentary session of the National Assembly on November 4, 2025. He gave subsidiarity for AI followed by defense in force. The specific budget proposals for 2026 come to an estimated 728 trillion won, assuming an 8.1 percent increase over the previous year. With his party holding a parliament majority, quick approval is likely as predicted.
AI Investments Tripling for Global Leadership
Talking to his nation, Lee outlined plans to triple the amount spent on AI to 10.1 trillion won, which is about $7 billion. This amount, aiming to be more than three times that of South Korea’s expenditure in 2025, is now higher than the latter. Lee wishes South Korea to be at the crest of the three greatest AI powers in the world alongside the United States and China, saying, “significant investments will be made to bring in an era of ‘AI.'” The funding will go to AI projects that are invested in various industries, everyday life, and in public services for a total of 2.6 trillion won. Training and infrastructure projects will absorb the rest of the 7.5 trillion won.
With the two most leading companies, Samsung Electronics and SK Hynix, South Korea produced RAM chips, known as the core parts of AI products, data centers, and the supply chain. Recently Nvidia CEO Jensen Huang made it worthwhile for Nvidia to supply South Korea 260,000 state-of-the-art chips. He commented that South Korea has good technology in software and manufacturing to work with.
Boost to Defense Budget in Times of Unrest
There was a rise of 8.2 percent in the defense budget to 66.3 trillion won, being the most significant increase since 2019. The military plan especially focused on the current military’s ongoing defense modernization, including AI integration within all defense systems. The president vowed cooperatively as, “We will embrace an era where all condemn the conventional weapons systems in the light of elite weapons systems required for the AI age and promptly remold our defense forces as a smart elite,”
The president was proud of the presently strong military. The leverage, he pointed out, is that his country pays approximately 1.4 times the annual GDP of North Korea in its defense. According to global rankings, South Korea is ranked fifth in military power. Some marked friction is still seen on the Korean Peninsula. These sentiments range back to the ongoing war between the North and South Korean regime factions, which never really ended since the Armistice was put into effect.
Change in Thinking under New Leadership
Lee came into power in June 2025 and has emphasized a different approach to North Korea than his predecessor. The North Korean political system is being acknowledged and dialogue is being initiated without precondition-pledging the president. The US has approximately 28,500 troops stationed in South Korea as a show of force to counter North Korea’s army. Analysts from the very start have termed the budget a strategic move to balance technology against the overarching security needs of the country. It is true that the president’s speech has put the spotlight on his presidential direction in a world that is shifting far too rapidly.
