Physical AI to take 4.9% of South Korea's 2027 AI budget
In short
South Korea's proposed physical AI budget for next year is 462.2 billion won, 4.9% of the science ministry's total AI budget of 9.4211 trillion won, according to data submitted to a lawmaker. Physical AI spending grows more than tenfold in two years, but the total AI budget grows faster, widening the gap to 8.9589 trillion won. Yonhap reported calls to link large language model projects such as frontier AI with physical AI work in manufacturing, robots and logistics.
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South Korea's proposed physical AI budget for next year is 462.2 billion won, or 4.9% of the Ministry of Science and ICT's total AI budget of 9.4211 trillion won, according to data the ministry submitted to Rep. Hwang Jung-a of the Democratic Party, a member of the National Assembly's science, ICT, broadcasting and communications committee. Newsis reported the same roughly 5% share in its headline. [ 1 , 2 ]
The physical AI budget expands quickly in absolute terms: 42.6 billion won in 2025, 175.8 billion won in 2026 and 462.2 billion won under the government's proposal for next year, an increase of 162.9% over the 2026 figure and more than ten times the 2025 level. But the total AI budget also rises 85.0% next year, from 5.0938 trillion won. As a result the gap between the total AI budget and physical AI spending widens from 4.918 trillion won this year to 8.9589 trillion won, Yonhap reported. [ 1 ]
The government has directed AI spending toward large language model development and advanced semiconductors, and is now allocating large sums to frontier-level AI models. It plans to put about 4.7 trillion won into frontier AI model development next year — close to half of the AI budget and about ten times the entire physical AI budget — although Yonhap said the specific method for the project has not been decided. [ 1 ]
Against that backdrop, Yonhap reported proposals that the government connect its large language model based projects — frontier AI and the independent AI foundation model — to the physical AI foundation model programme, so that models with language and reasoning abilities can be applied in manufacturing, robots and logistics and the full cycle from development to demonstration can be handled more efficiently. Linking frontier AI to industrial demand would also give companies an incentive to keep investing after government support ends, the report said. Newsis's headline likewise called for linking physical AI with the frontier AI project. [ 1 , 2 ]
Yonhap pointed to Japan, where it said language models and physical AI are treated as one roadmap rather than separate programmes, with public and private money combined to extend technology from language models to physical AI on manufacturing floors. Noetra, the domestic AI company led by Sony, SoftBank, NEC and Honda, has 44 corporate investors including Sharp, Mitsubishi Electric, Kawasaki Heavy Industries and Fanuc; it began developing a Japanese-language reasoning model this year and is expanding into language, images and video, according to the report. [ 1 ]
Why it matters
The figures show how the government is weighting its AI spending ahead of a budget that leans heavily toward frontier model development, with physical AI — AI applied in factories, robots and logistics — taking a small share. Because the documents come from a national news agency and a business outlet reporting budget data rather than a policy decision, the practical effect depends on how the budget is finalised and whether the proposed links between language-model and physical AI projects are adopted.
Key facts
- The government's proposed physical AI budget for next year is 462.2 billion won, 4.9% of the science ministry's total AI budget of 9.4211 trillion won [ 1 , 2 ]
- The physical AI budget rises from 42.6 billion won in 2025 to 175.8 billion won in 2026 and 462.2 billion won in the government's proposal for next year [ 1 ]
- The science ministry's total AI budget rises 85.0% next year, from 5.0938 trillion won, and the gap with physical AI spending widens from 4.918 trillion won this year to 8.9589 trillion won [ 1 ]
- The government plans to spend about 4.7 trillion won on frontier-level AI model development next year, with the specific project method not yet decided [ 1 ]
- The data was submitted by Rep. Hwang Jung-a of the Democratic Party, a member of the National Assembly's science, ICT, broadcasting and communications committee, after a request to the Ministry of Science and ICT [ 1 ]
- Japan's Noetra, backed by Sony, SoftBank, NEC and Honda with 44 investors including Sharp, Mitsubishi Electric, Kawasaki Heavy Industries and Fanuc, began developing a Japanese-language reasoning model this year and is expanding from language toward physical AI in manufacturing [ 1 ]
- Newsis reported in its headline that physical AI accounts for about 5% of the total AI budget and that it should be linked with the frontier AI project [ 2 ]
Confirmed by several sources
Still unclear
- Whether the physical AI budget and the frontier AI, independent AI foundation model and physical AI foundation model projects will be formally linked Yonhap reports the idea as a proposal raised by critics and analysts, not as an adopted government plan, and says the specific method of the frontier AI project has not been decided
- How the Newsis article supports the budget story Newsis's headline states the roughly 5% share and the call to link physical AI with the frontier AI project, but the article text carried by the document deals with a separate police investigation into financial-sector hacking, so only the headline supports this event