The government will pour more than 21 trillion won into three megaprojects and artificial intelligence next year to keep its lead in semiconductors, and more than 41 trillion won into small modular reactors, quantum technology, space and biotechnology as candidates to become "the next semiconductor." With this year's chip boom producing a record budget proposal of 820 trillion won, the government plans to reinvest the windfall in future growth engines to sustain momentum.
To rein in rising property prices through what officials call an all-out supply push, the government will allocate a record 44 trillion won to the housing budget and supply more than 1.1 million public rental homes by 2030, aiming to sharply ease the burden on owner-occupier buyers who do not own a home.
Under the 2027 budget proposal approved by the Cabinet on the 1st, the government will spend 21.3 trillion won next year on all-out support for the three megaprojects and AI. That is 97.2% more than this year's 10.8 trillion won.
In semiconductors, the government will create a new special account worth 2.6 trillion won, to be used to build production infrastructure and an industrial ecosystem centered on the greater Seoul area and the southwestern region. In particular, 6 trillion won will go into building a southwestern chip hub over four years, with 1.5 trillion won allocated first for next year.
AI investment will also expand. The government will select eight new fields for demonstrating and deploying physical AI, backed by 500 billion won. A total of 1.5 trillion won has been set aside for developing core AI technologies, including systems that transfer the experience and know-how of skilled manufacturing workers to AI.
Investment aimed at the era beyond semiconductors will also begin in earnest. The government plans to spend 41.4 trillion won to nurture advanced strategic industries, of which 39.5 trillion won will go to research and development of next-generation core technologies. The focus is on what the government calls the seven SEED national strategic core technologies, which include small modular reactors, nuclear fusion, renewable energy, quantum technology, aerospace, advanced biotechnology and advanced supply chains. Another 15 trillion won will go to the "NEXT 10" strategic technologies such as advanced robotics and mobility.
To provide the infrastructure that advanced industries need on the ground, the government will spend 1.5489 trillion won on power and 386.2 billion won on water supply. Investment to expand the power grid will also be strengthened. The government will provide 572.4 billion won for energy storage systems at transmission substations and increase its capital injection into KEPCO by 500 billion won. Alongside support for advanced industries, the government will accelerate its energy transition, with related spending rising to 6.6 trillion won next year from 4.2 trillion won this year.
Support for young adults will total 43.3 trillion won, up 53.5% from this year. The government will ease the income requirement for monthly rent subsidies for young adults to 100% of median income, or 2.73 million won a month next year, while scrapping the income requirement for the youth future savings program to widen eligibility and providing government matching contributions of up to 25% for low-income young adults and those outside the greater Seoul area. To expand job opportunities, the government will create a first-job support program for unemployed young adults and a youth opportunity fund of up to 20 million won. It will also strengthen support for marriage, childbirth and child-rearing and expand the youth culture and arts pass to all people aged 19 to 34, broadening support across housing, asset building, employment, family and culture at each stage of life.
Housing supply will also be accelerated with 44 trillion won in next year's housing budget, up 14.5% from 38.4 trillion won this year and the largest ever. The biggest share goes to public housing, with 30 trillion won allocated next year alone to raise public housing supply to 218,000 units next year from 194,000 this year. Of that, 106,000 units are for young adults, an increase of 35,000 from 71,000 this year. The government has allocated 18.1 trillion won next year to supply public rental housing in preferred locations such as areas near urban subway stations to young adults, roughly double this year's 9.4 trillion won.
The government will also sharply ease financial rules needed to speed up housing supply and has included a range of new programs to provide financing for developers. It will spend 169.6 billion won on an interest subsidy program for project financing loans on residential developments that break ground early, cutting their financing costs, and will put 100 billion won into "PF anchor REITs," a vehicle dedicated to housing projects in which the public sector invests upfront at the start of development.
The push follows President Lee Jae-myung's emphasis on supplying homes at all costs. At the Cabinet meeting, Lee said the government has "eased just about every lending program there is," adding, "There are no financial restrictions on supply. Lending has been expanded as far as possible." Prime Minister Han Seong-sook said she would "do everything possible, with my job on the line," adding, "If even a single home can be built, we will find the site quickly and permit, break ground and build it as fast as we can."
