South Korean President Lee Jae Myung delivered a pivotal budget speech, advocating for a significant increase in government spending on artificial intelligence (AI) infrastructure and technology, alongside a boost in defense spending. The speech, delivered at the National Assembly, outlined a proposed budget of 728 trillion won ($506 billion) – an all-time high – which Lee characterized as the nation's "first budget to open the AI era."

A central tenet of Lee's address was the call for lawmakers to approve 10.1 trillion won ($6.9 billion) in AI-related spending, more than triple the current year's level. This substantial investment aims to advance South Korea's AI computing and manufacturing capabilities, with a strategic focus on key industries such as semiconductors, automobiles, shipbuilding, and robotics. Lee drew parallels to historical national development drives, stating, "Just as President Park Chung-hee paved the highway for industrialization and President Kim Dae-jung built the highway for the information age, we must now construct the highway for the AI era to open a future of progress and growth."

Regarding the critical issue of access to AI chips, Lee expressed confidence, citing a deal with Nvidia. This agreement, forged during a meeting between Lee and Nvidia CEO Jensen Huang at the Asia-Pacific Economic Cooperation (APEC) meetings, involves Nvidia supplying 260,000 graphics processing units (GPUs) for AI infrastructure projects. These GPUs are designated for major South Korean businesses and the government, specifically 50,000 each to the government, chipmakers Samsung and SK, automaker Hyundai, and an additional 60,000 to internet company Naver. However, uncertainties cloud the immediate delivery, as Huang indicated that AI data centers and power networks must first be established. Furthermore, concerns intensified after U.S. President Donald Trump suggested that only U.S. customers should have access to Nvidia's latest Blackwell AI chips, declaring, "We don’t give that chip to other people."

In addition to AI, Lee urged approval for a planned 8.2% increase in defense spending for the next year, totaling 66.3 trillion won ($46 billion). This allocation is intended to modernize the military’s weapons systems, including through the adoption of AI technologies, and to reduce the nation's reliance on the United States for security. Lee underscored the importance of national pride, questioning South Korea's continued dependence despite its significant defense expenditure and perceived military strength. During his meeting with Trump, Lee also reaffirmed South Korea’s commitment to increased defense spending and sought U.S. support for acquiring nuclear-powered submarines. Trump subsequently indicated on social media that the U.S. would share closely-held technology for South Korea to build such a vessel, to be constructed at the Philly Shipyard in Philadelphia, recently acquired by South Korea’s Hanwha Group.

Lee's comprehensive speech coincided with annual security talks in Seoul between U.S. Defense Secretary Pete Hegseth and South Korean Defense Minister Ahn Gyu-back, where key alliance issues, including South Korea’s defense spending commitments and the transfer of wartime operational control, were expected to be addressed. The speech also occurred amidst a political divide, with most conservative opposition lawmakers boycotting the address due to an ongoing rift over a criminal investigation into former President Yoon Suk Yeol’s brief imposition of martial law.