South Korea Unveils $7 Billion AI Push to Join U.S. and China in Global Tech Race

ERBIL (Kurdistan24) – In a bold and ambitious declaration of technological intent, South Korean President Lee Jae Myung on Tuesday announced plans to triple the nation's spending on artificial intelligence, a massive 10.1 trillion won ($7 billion) investment aimed at propelling the country into the exclusive ranks of the "world's top three AI powers" alongside the United States and China.

The landmark proposal, part of a broader budget plan that also includes the largest defense spending increase in six years, signals a decisive strategic pivot for South Korea, a nation determined to leverage its formidable technological base and manufacturing prowess to secure a leading role in the defining technological revolution of the 21st century.

The President's announcement, delivered during his annual parliamentary budget speech, is a clear and forceful statement that South Korea is not content to be a mere participant in the AI era but is determined to be one of its principal architects.

"We will significantly expand investment to usher in the 'AI era'," President Lee stated, as reported by Agence France-Presse (AFP), noting that the proposed funding is more than three times the current year's AI-related budget.

"We will overhaul conventional weapons systems into state-of-the-art systems suited for the AI era and swiftly transform our military into an elite, smart force," he added, directly linking the nation's technological and military futures.

This ambitious national project, however, is being launched amidst a complex and delicate geopolitical balancing act, a reality that was humorously, yet pointedly, highlighted during a recent meeting between President Lee and Chinese leader Xi Jinping.

As reported by The New York Times, the two leaders shared a laugh over the very issue that lies at the heart of the global technology race: espionage and security.

The revealing and unusual exchange occurred in the South Korean city of Gyeongju, when President Xi presented his South Korean counterpart with two new cellphones manufactured by the Chinese company Xiaomi.

After admiring the gift, President Lee asked a pointed question: how good was the security? President Xi's response was both disarming and telling.

"You can check if there’s a backdoor,” he said with a laugh, a direct and playful reference to the widespread concerns in the U.S. and its allied nations that Chinese technology could be used for surveillance and espionage.

The lighthearted moment, as one analyst noted, was a way of "laughing off" the secret world of espionage while simultaneously underscoring the deep economic collaboration between the two nations, even as South Korea remains a key military ally of the United States.

It is within this intricate web of technological ambition, economic partnership, and strategic alliance that President Lee's AI initiative must be understood.

The proposed budget, which totals 728 trillion won overall and now requires parliamentary approval, is a detailed blueprint for this national transformation. Of the 10.1 trillion won allocated for AI, President Lee specified that 2.6 trillion won "will be invested in introducing AI across industry, daily life and the public sector, while 7.5 trillion won will go towards talent development and infrastructure building."

South Korea is uniquely positioned to make this leap. The nation is home to two of the world's leading memory chip makers, Samsung Electronics and SK hynix, tech giants that manufacture the essential components for advanced AI products and the power-hungry data centers upon which the industry relies.

This domestic technological strength has not gone unnoticed by the global leader in AI hardware. Just last week, Jensen Huang, the CEO of the U.S. chip titan Nvidia, announced plans to supply 260,000 of his firm's most advanced chips to South Korea, with major recipients including Samsung, SK Group, and the Hyundai Motor Group.

When asked about President Lee's goal of making South Korea one of the world's top three AI powers, Huang described it as "ambitious," but immediately added, "there's no reason why Korea cannot achieve it -- you have the technology, you have the software expertise and you also have a natural ability to build manufacturing plants."

The push for technological supremacy is being matched by a significant increase in military spending.

President Lee's budget calls for an 8.2 percent increase in the defense budget, bringing it to 66.3 trillion won. If passed, it will be the largest annual increase since 2019. This investment is not just about expanding the military, but about transforming it. 

The goal, as the South Korean President stated, is to create an "elite, smart force" by overhauling conventional weapons systems and integrating state-of-the-art AI technology.

This military modernization is taking place in the context of a long and tense standoff with North Korea. The United States maintains about 28,500 troops in South Korea to help deter military threats from Pyongyang, a regime with which Seoul technically remains at war since the 1950-53 Korean War ended in an armistice, not a peace treaty.

President Lee noted that South Korea already spends "1.4 times North Korea's annual GDP" on defense alone and is "ranked fifth in global military strength." Since taking office in June, he has adopted a policy of pursuing dialogue with the North without preconditions, a sharp break from the more hawkish stance of his predecessor.

The ambitious AI and defense initiatives are a bold declaration of South Korea's intent to shape its own destiny in an increasingly complex and competitive world.

However, the nation's path is constrained by the powerful gravitational pulls of its two most important partners: its primary military ally, the United States, and its largest trading partner, China.

Navigating the growing rivalry between Washington and Beijing is a formidable challenge. Just last week, in a clear demonstration of the strength of the U.S. alliance, President Lee awarded President Trump South Korea’s highest decoration and a replica of an ancient gold crown. Days later, he was sharing a joke with President Xi about the potential for Chinese espionage in a gifted cellphone.

As John Delury, a historian of China based in Seoul, explained to The New York Times, President Lee's playful exchange with President Xi was a way of acknowledging the security concerns about Chinese products, but "by joking about it, by using irony, ultimately he’s dismissing a lot of those concerns and saying, ‘Thank you for the phone and it’s great that Korean and Chinese companies are building it together.’”

It is this delicate, high-stakes balancing act—embracing economic collaboration with China while maintaining a deep security alliance with the United States—that will define South Korea's path as it strives to take its place at the very top of the new technological world order.