Industry ministry seeks record-high budget for 2026 to foster growth

Visitors inspect various exhibits at the 2025 Next-Generation Semiconductor Packaging Industry Exhibition, at the Suwon Convention Center in Gyeonggi Province, Aug. 28. Yonhap

The industry ministry said Monday it has proposed a record 13.88 trillion won ($9.97 billion) budget for next year to revitalize the sluggish economy and strengthen trade response measures amid global uncertainties.

The proposal marks a 21.4 percent increase from the 2025 budget of 11.4 trillion won, according to the Ministry of Trade, Industry and Energy.

If approved by the National Assembly as proposed, it will mark the first time the ministry's budget will top 13 trillion won.

The ministry plans to double its budget for the artificial intelligence (AI) transformation of the manufacturing industry from this year to 1.1 trillion won in 2026 to help the sector overcome challenges stemming from a shrinking workforce and a slowing growth rate.

Of the 1.1 trillion won, the ministry allocated 220 billion won on a project aimed at building at least 500 AI factories by 2030, and 402.2 billion won on developing physical AI, such as humanoid robots and on-device AI chips, and AI software for the automotive, home appliances and other industries.

The ministry also seeks to sharply increase its 2026 budget for advanced industries to 1.6 trillion won from this year's budget of 1.3 trillion won, with a focus on developing core technologies, such as a mini-semiconductor fabrication plant, advanced chip packaging technology, icebreaker technology for operation in the Arctic shipping routes and advanced technologies for the battery and display sectors.

In particular, the ministry set aside some 30 billion won in connection to the envisioned shipbuilding cooperation between South Korea and the United States, including 6.6 billion won for establishing a Korea-U.S. technology cooperation center, 5 billion won for strengthening the global competitiveness of Korean companies in the naval maintenance, repair and overhaul (MRO) market, and 7.7 billion won for supporting small and medium-sized shipbuilders' business in the U.S.

In July, South Korea pledged to invest $150 billion for shipbuilding cooperation with the U.S. under a project dubbed "Make American Shipbuilding Great Again" and another $200 billion for cooperation in other advanced industries, as part of its tariff deal with the Donald Trump administration.

The ministry has earmarked 1.27 trillion won for transition to renewable energy, up 42 percent from 2025.

The budget will be spent on fostering the use of renewable energy, developing next-generation small modular reactors and supporting the government's plan to build high-voltage direct current (HVDC) infrastructure across the nation by 2040s.

The ministry also set aside 1.7 trillion won for efforts to respond to global trade uncertainties, which, if approved, would mark a whopping 67.8 percent spike from its 2025 budget.

Of the 1.7 trillion won, the ministry will contribute 600.5 billion won to the trade insurance fund partly in connection to the envisioned industrial cooperation projects with the U.S., and 42.4 billion won will be used as emergency export vouchers for small and medium-sized enterprises.

In addition, 50 billion won has been set aside to support overseas expansion of logistics firms and promote exports of Korean consumer goods amid the global popularity of K-culture.

For supply chains, the ministry said it proposed a budget of 2 trillion won for next year, up 11.8 percent from 1.8 trillion won for 2025, to foster the development of materials and parts for strategic industries.