The South Korean government is increasing investment support for materials, parts, and equipment (known as 소부장) companies to strengthen the supply chains of advanced industries such as semiconductors and batteries. This year, the support will also extend to the robotics and defense sectors, aiming to bolster domestic production capabilities across strategic industries amid U.S.-China supply chain competition.
On May 17, the Ministry of Trade, Industry and Energy announced that it will unveil the investment support plan and procedures for small and medium-sized enterprises in the national advanced strategic industry sector on May 18.
This initiative, launched last year, aims to enhance domestic production capacity for key materials and components in response to global supply chain restructuring and rising protectionism, ensuring the stability of advanced industry supply chains.
Last year, the government provided approximately 120 billion won to 22 companies, resulting in a total investment plan of 556.1 billion won for facilities and locations. About 80% of the supported companies invested outside the capital region, contributing to regional economic revitalization.
For this year, the national budget for this initiative has been set at 100 billion won, an increase of 30 billion won from last year. Including local government contributions, the total support is expected to reach around 170 billion won. Based on last year's average support per company, the government anticipates that about 30 companies will benefit from this program.
Industry experts believe that as competition intensifies in sectors like artificial intelligence (AI) semiconductors, advanced defense, and battery supply chains, the increased support will serve as an incentive for small and medium-sized 소부장 companies to make significant facility investments.
The scope of support has also expanded. In addition to the existing four sectors—semiconductors, batteries, biotechnology, and displays—robotics and defense have been newly included this year. Consequently, small and medium-sized 소부장 companies producing stable supply chain items or strategic materials in six national advanced strategic industry sectors will now be eligible for support.
The support will cover 30% to 50% of new investment costs for domestic facilities and locations. The Ministry aims to reduce supply chain risks by expanding domestic production bases for key items in advanced strategic industries while also encouraging regional investments.
Applications for the program can be submitted through the e-Nara Doum website until 4 p.m. on July 17. The Ministry and the Korea Industrial Technology Agency (KIAT) will hold an information session on May 27 at the Korea Technology Center in Gangnam, Seoul, to provide details on the support and application process to companies and local governments.
* This article has been translated by AI.
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