The government will create a future response fund using what it calls record tax revenue in 2027 and concentrate fiscal spending on three mega-projects including AI.

Deputy Prime Minister and Science and ICT Minister Baek Kyung-hoon (배경훈) said at the 2026 National Fiscal Strategy Meeting chaired by President Lee Jae-myung at Cheong Wa Dae on Sunday that now is a golden time for the country to unite its capabilities as competition intensifies to secure a general-purpose physical AI platform.

The government forecasts national tax revenue in 2027 will exceed 500 trillion won, far above the previous estimate of 412 trillion won. It plans to use the funds to create a future response fund and invest intensively in four priority areas: the youth generation, growth engines, regions and talent. It also plans to allocate fiscal resources first to three mega-projects: semiconductors, AI data centres (AIDC) and physical AI.

The Ministry of Science and ICT will work with private companies to focus on expanding large-scale AIDC capacity. The target is to build AIDC capacity of 8.4 gigawatts by 2029 and 18.4 gigawatts by 2035, led by major domestic conglomerates. It plans to invest up to more than 1,000 trillion won in two phases. Sejong, Donghae and Ulsan have been confirmed as final AIDC sites and are being pursued, and 3 to 4 more sites are under review.

Baek described AIDC as, in essence, the space where AI models operate and said it is core infrastructure that creates production tokens that improve the performance of AI services.

The ministry will provide full support through a cross-ministry comprehensive support task force for securing sites and power and for permits and approvals. It will also localise key technologies such as AI semiconductors, cloud and cooling power solutions and foster them into export industries. It will build an industry-academia-research cooperation system called the AI Data Center Alliance and also provide large-scale demonstration testbeds and package support for personnel, tax and funds.

It will also focus on fostering physical AI technology. Baek said the country that pre-empts a general-purpose physical AI platform will lead future industrial competitiveness.

The government will push from this year to develop a "world model", a foundational technology to mass-produce high-quality synthetic data. It also plans to complete a general-purpose physical AI foundation model through industry-academia-research R&D in North Jeolla and South Gyeongsang provinces and pursue export industrialisation.