Seoul's Left has spent decades arguing that the state should steer the economy rather than just referee it. So I'm not going to scold President Lee Jae Myung for proposing a 12.8% budget increase and pouring 21.3 trillion won into chips, physical AI and data centers. Austerity is the wrong religion, and a country wedged between Washington and Beijing cannot leave its technological future to the market.
But the Left's job is to ask the question every industrial policy eventually faces: who gets paid when it works?
The timing of this budget is almost too perfect. While Lee tells the National Assembly that Korea will build the world's highest-performing sovereign AI model, Sam Altman is in Yongin meeting Samsung executives. Samsung and SK Hynix already have arrangements with OpenAI on advanced memory chips and possible Korean data centers. The word "sovereign" is carrying a lot of weight here. A country that supplies the memory for an American firm's models while spending 4.7 trillion won on its own rival is not showing independence. It is hedging, which is sensible, but it should be described honestly. The real beneficiaries of this hedge are the conglomerates, who sell to everyone, whoever wins.
Korea has run this experiment before. The developmental state gave the chaebol cheap credit, protected markets and political patience. The implicit bargain was that national sacrifice would become shared prosperity. We know how that turned out: spectacular corporate success alongside a split labor market, precarious subcontract work and the highest elderly poverty rate in the OECD. The country also has the lowest fertility rate in the world, which is what a society says when young people look at the cost of housing, work and childrearing and decline the offer.
A budget that routes hundreds of billions of won to semiconductors and data centers should not ask the public to trust that gains will trickle down. They never reliably have. If taxpayers fund the compute, taxpayers should own part of it. That means equity stakes or returns that flow into a public fund, not just tax credits. It means a sovereign model whose weights, datasets and compute access are open to universities, startups and public agencies, not captured as one more proprietary asset for a corporate partner. It means binding conditions on subcontractor pay, on the treatment of Samsung's workers, and on who bears the cost of the electricity and water these data centers consume, especially in the regions asked to host them.
The obvious objection is that conditions scare off investment, and that in a race against American and Chinese giants Korea can't afford to be picky. That is the argument every conglomerate makes whenever the public asks for something in return. It is also contradicted by the facts. The state is not a supplicant here. Korea makes some of the most strategically important components in the AI supply chain, and Altman came to Yongin because he needs them. The government has leverage and should use it.
There is also a political risk for Lee's own camp. A progressive government that spends big on AI while wages stagnate and AI threatens the white-collar jobs of the young will reinforce the suspicion that "innovation" is a word for people at the top. Workers hear promises about the future economy and see the profits headed for Samsung's shareholders and Silicon Valley's customers.
The case for public investment in AI is strong. The case for doing it on the old chaebol terms is weak. If Seoul wants to build something truly sovereign, it should begin by making sure the Korean public, not just Korean champions, owns a share of it.
