[비즈한국] While the AI craze is blowing fiercely across the globe, South Korea is also set to invest nearly 10 trillion won in the AI sector next year. However, as the AI budget increases significantly, concerns are rising that taxpayer money could be wasted, given the large number of projects exempted from preliminary feasibility studies or cases where multiple ministries are competing for the same initiatives. With the "AI bubble theory" emerging due to excessive investments by governments and companies worldwide, a government-led AI bubble could potentially form in Korea as well.
According to the "2026 Budget Plan" passed by the National Assembly on the 2nd, the budget to support South Korea's goal of becoming one of the top three AI powerhouses was set at 9.9334 trillion won. Initially, the government had requested 10.1398 trillion won for AI support, but 206.4 billion won was cut after opposition parties raised issues with certain projects. Nevertheless, the reduction accounted for only 2.0% of the total AI support budget.
Notably, despite the cuts, the AI support budget is more than three times larger than this year's AI-related budget of 3.2576 trillion won. By sector, approximately 3 trillion won has been allocated to technology development, more than double this year's budget (1.6608 trillion won). For the AI Transformation (AX) project across all sectors, about 2.6 trillion won has been allocated, a fivefold increase from this year (552 billion won). Approximately 2.5 trillion won—ten times more than this year (255.9 billion won)—was allocated for infrastructure and research foundations, such as purchasing Graphics Processing Units (GPUs), which are the core of AI. Meanwhile, about 1.4 trillion won was allocated for nurturing AI talent, a twofold increase from this year (696.6 billion won).
This sharp increase in the AI budget stems from the belief that AI is a cutting-edge industry that will sustain future generations. President Lee Jae-myung stated in his "2026 Budget Address to the National Assembly" on the 4th of last month, "The 2026 budget prepared by the government is the very first budget of the Republic of Korea to open the AI era," adding, "As this is a strategic investment that considers both future growth and fiscal sustainability in the AI era, I ask for the active cooperation of the National Assembly."
The problem is that despite some cuts, the budget is still three times larger than this year's, meaning the potential for waste remains in many areas. In fact, most of the projects exempted from the preliminary feasibility study—a mechanism designed to prevent budget waste—among next year’s new budget items are AI-related. According to the National Assembly and various ministries, there are 20 new projects in 2026 that have been granted exemption from preliminary feasibility studies, and 14 of them are related to AI.
The Ministry of Climate, Energy and Environment's project to foster an AI-based distributed power grid industry, which has a total project cost of 1.0029 trillion won (with a 2026 budget of 119.6 billion won), was exempted from the feasibility study. Similarly, the Ministry of Science and ICT’s Large Action Model (LAM) development and global demonstration project (2026 budget of 40 billion won) and the Collaborative Intelligence Physical AI-based Software (SW) platform research and development ecosystem project (2026 budget of 40 billion won)—each requiring 1 trillion won—were also exempted. The Ministry of Trade, Industry and Energy’s K-On-Device AI semiconductor technology development project, with a total cost of 997.3 billion won (2026 budget of 185 billion won), was also excluded from the feasibility study.
Most of these AI projects lack detailed business plans or demand surveys, yet they were excluded from feasibility studies on the grounds that they are research and development (R&D) projects. However, critics point out that the AI-based distributed power grid industry project could face difficulties if local communities resist the establishment of regional power grids. As for the LAM development and global demonstration, concerns have been raised regarding insufficient measures for intellectual property rights and performance distribution between domestic and foreign companies.
Concerns about overlapping investments are also emerging as ministries race to secure AI budget projects. The "AI Application Product Rapid Commercialization Support Project," which will receive about 600 billion won next year, is being conducted simultaneously by 10 different ministries. This project aims to provide government funding for items that can be developed within a year and quickly penetrate the market, or for core items with high public utility and significant impact.
However, it is pointed out that projects under the Ministry of Health and Welfare and the Ministry of Food and Drug Safety could overlap in the bio-health sector. Similar concerns have been raised regarding potential overlaps between the Ministry of Science and ICT and the Ministry of SMEs and Startups across various industrial fields. In particular, as ministries begin accepting applications all at once starting in October, there is a risk of not only duplicate support but also poor project screening.