Lee administration boosts basic research and AI factories, but fiscal strain and US dependence raise long-term risks

South Korea on Monday proposed record sums for next year’s budget to support basic research and industrial policy, with the Ministry of Science and ICT seeking $19.6 billion (27.4 trillion won) and the Ministry of Trade, Industry and Energy $9.9 billion (13.9 trillion won). The allocations, the largest to date for each ministry, are included in the government’s $522.9 billion (728 trillion won) national budget plan for 2026, which the Cabinet endorsed on Friday. The proposal will be submitted to the National Assembly on Wednesday for deliberation and approval.

The science ministry said it would expand the number of research projects by 28.5% and restore grants cut in 2024, while also introducing new fellowships to entice Korean researchers based overseas to return to the country. The industry ministry doubled its budget to $790 million (1.1 trillion won) for projects that apply artificial intelligence (AI) to manufacturing, including the goal of building 500 AI-driven factories by 2030, and also boosted funding for semiconductors, shipbuilding and batteries. Spending on renewable energy will rise to $912 million (1.27 trillion won), with support for small modular reactors and high-voltage power grids.

South Korea on Monday proposed record sums for next year’s budget to support basic research and industrial policy, with the Ministry of Science and ICT seeking $19.6 billion (27.4 trillion won) and the Ministry of Trade, Industry and Energy $9.9 billion (13.9 trillion won). The allocations, the largest to date for each ministry, are included in the government’s $522.9 billion (728 trillion won) national budget plan for 2026, which the Cabinet endorsed on Friday. The proposal will be submitted to the National Assembly on Wednesday for deliberation and approval.

The science ministry said it would expand the number of research projects by 28.5% and restore grants cut in 2024, while also introducing new fellowships to entice Korean researchers based overseas to return to the country. The industry ministry doubled its budget to $790 million (1.1 trillion won) for projects that apply artificial intelligence (AI) to manufacturing, including the goal of building 500 AI-driven factories by 2030, and also boosted funding for semiconductors, shipbuilding and batteries. Spending on renewable energy will rise to $912 million (1.27 trillion won), with support for small modular reactors and high-voltage power grids.

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