Finance ministry pledges 3.1 trillion won for physical AI in 2027

South Korea's finance ministry said Friday it will raise the physical AI budget to 3.1 trillion won ($2.34 billion) next year from 900 billion won ($679 million) this year.

Speaking at the ninth Digital Economy Forum at the Grand Hyatt Seoul, First Vice Minister Kweon Dae-young presented three policy directions centered on expanding growth engines through artificial intelligence while ensuring the benefits are shared broadly. The forum was held under the theme "AI for Growth, Growth for All."

The physical AI spending is intended to accelerate productivity innovation in manufacturing and robotics. In a second track, the government plans to apply AI to seven "SEED" projects covering advanced bio, small modular reactors, quantum technology and aerospace, part of an effort to develop industries beyond semiconductors.

"This is now the time for our country to lead the AI era," Kweon said in his opening remarks, adding that the government would strengthen AI education support and work through housing, employment and financial policy to narrow gaps between generations, regions and companies.

In a welcoming address, Korea Startup Forum CEO Choi Ji-young said startups that have taken on new technologies and opened markets sit at the center of digital economy innovation, and praised their global competitiveness and growth potential. She said cooperation among government, academia and business is essential for companies and citizens to share the gains from AI-driven growth.

Frederic Werner, head of strategic cooperation at the International Telecommunication Union, delivered the first keynote, stressing that international cooperation and joint efforts are needed so the benefits of AI development spread evenly across humanity rather than concentrating in particular countries or groups.

Lim Chi-hyun, head of the digital transformation strategy office at Posco Holdings, gave the second keynote. He described redesigning processes in steel, battery materials, energy and infrastructure around AI, along with efforts to overhaul office and research work and commercialize AI solutions, and argued for embedding AI within manufacturing companies.

The forum's four panel sessions covered AI-driven productivity in steel and petrochemicals, next-generation growth engines beyond semiconductors, adapting to job and skill changes across generations, and regional growth models linking local industries with AI. This year's event also added a pitching session where AI startups in manufacturing, bio and education presented their technologies and business models.