South Korea is proposing a record 2027 budget of more than 800 trillion won (about $531 billion), fueled by strong tax revenues from AI chip-related growth.

Budget Minister Park Hong-keun says the plan relies on a major restructuring of existing spending rather than solely on higher tax receipts to secure funding capacity.

The plan signals how windfall gains from the global AI and semiconductor cycle will influence long-term national investment and policy priorities.

A Future Response Fund will channel excess tax revenue into four strategic areas—youth, growth engines, regions, and talent—as a dynamic investment platform.

Another label for this initiative is the Future Adaptation Fund, focused on future industries, education, youth, and regional development.

The government intends to launch the Future Response Fund to invest surplus tax receipts in youth, growth engines, regions, and talent.

Economists warn the chip boom could distort markets, with bond pressure and inflation risks from chip bonuses, making the expansionary budget a deliberate choice rather than neutral.

Budget highlights prioritize three mega-projects—chips, AI data centers, and physical AI—and funding will come from restructuring existing programs rather than relying solely on extra tax revenue.

The three mega-projects—chips, AI data centers, and physical AI—will receive top priority in the 2027 plan.

Financing the budget will involve higher tax receipts and expenditure cuts, with the mega-projects at the forefront.

President Lee Jae Myung says all available means will be used to ensure corporate investments stay on schedule, underscoring AI and chip sector importance.

The windfall is concentrated, with Samsung Electronics and SK Hynix expected to post operating profits above 600 trillion won this year as semiconductors lift exports.