Realizing the Leap to a 'Global Factory of Advanced Industries'... Establishing the '5-Year Basic Plan for So-Bu-Jang'

Government Holds '5th SoBuJang Competitiveness Enhancement Committee'
'SoBuJang 2.0 Strategy' Confirmed as Legal Plan under Special Act
R&D Core Items, From 100 vs Japan to 185 Worldwide
7 Trillion Won Invested in Next-Gen Fields by 2022

Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, speaking at the 4th Materials, Parts, and Equipment (SoBuJang) Competitiveness Enhancement Committee held on the afternoon of May 13 at the Korea Research Institute of Chemical Technology in Daejeon. He is the chairman of the SoBuJang Competitiveness Enhancement Committee. (Image source=Yonhap News)

[Asia Economy Reporter Moon Chaeseok] The government has established a five-year basic plan for materials, parts, and equipment to proactively respond to the reorganization of the global value chain (GVC) in the post-COVID-19 era.

It will enhance the R&D system for materials, parts, and equipment by investing 7 trillion won in next-generation fields by 2022. The goal is to leap beyond overcoming Japan's export restrictions and become a global powerhouse in materials, parts, and equipment.

On the 14th, the government announced that it held the "5th Materials, Parts, and Equipment Competitiveness Enhancement Committee" at the Government Seoul Office and deliberated and approved a total of four agenda items, including this plan.

Based on the "Materials, Parts, and Equipment 2.0" strategy announced on July 9, the government established and approved the "Basic Plan for Strengthening the Competitiveness of the Materials, Parts, and Equipment Industry (1st Plan)" for the first time. The first plan was created based on the "Materials, Parts, and Equipment Special Act," which has been in effect since April.

Establishment of a Five-Year 'Basic Plan for the Materials, Parts, and Equipment Industry'

Seong Yun-mo, Minister of Trade, Industry and Energy (third from the left), speaking at a joint briefing of related ministries on the 'Materials, Parts, and Equipment 2.0 Strategy' for advancing into a global hub of advanced industries, held on the morning of July 8 at the Government Seoul Office. (Photo by Yonhap News)

The first plan, established for the first time, reflects the "Materials, Parts, and Equipment 2.0" strategy, which aims to leap into a materials, parts, and equipment powerhouse through proactive response to GVC, as a statutory plan.

First, it will manage 338+α key materials, parts, and equipment items in core industries and new industries to aggressively respond to GVC reorganization.

It will support the entire cycle from testbeds, reliability certification, to mass production to commercialize developed technologies.

It plans to actively promote the preemption of core materials, parts, and equipment technologies for future new industries.

It will also promote timely development of key equipment with high import dependency or significant impact on upstream industries.

The government plans to steadily implement the first plan centered on the committee. Based on the first plan, it will establish an annual "Implementation Plan for Strengthening the Competitiveness of the Materials, Parts, and Equipment Industry."

Through this, it will closely review and supplement the performance of each ministry by year and the implementation plan for the following year.

Addition of 85 Core R&D Items... 7 Trillion Won Investment by 2022

President Moon Jae-in delivering a special national address on the third anniversary of his inauguration at the Blue House Chuncheon Hall on the morning of the 10th. President Moon has stated, "I will make South Korea the 'world factory of advanced industries'." (Image source=Yonhap News)

The government discussed the "Materials, Parts, and Equipment R&D Advancement Plan" to achieve technological independence. It will add 85 new core R&D items. Previously, there were 100 items "for Japan," but this will increase to 185 items "for the world."

It plans to invest 7 trillion won in next-generation fields by 2022. To create and preempt future supply chains, it will proactively discover "future leading items."

It will expand inter-ministerial cooperative projects such as "relay running" and "running together."

It will introduce a "long-distance running" program to support long-term research and technology accumulation and relax the matching burden criteria for research funds.

When developing core strategic technologies through cooperation between large and small-medium enterprises, it will lower the minimum private burden ratio for companies. For large and medium-sized enterprises, it will be adjusted from 40-50% to at least 25%, and for small enterprises, from 25% to at least 20%.

Approval of Data-Based Materials Research Innovation Hub Establishment and Utilization Plan

In connection with the Digital New Deal, the government also deliberated and approved the "Data-Based Materials Research Innovation Hub Establishment and Utilization Plan," which uses data and artificial intelligence (AI) in materials research to reduce the development period and cost of new materials by more than half.

It will build an "innovation hub" where materials research data can be collected, shared, and utilized, along with an environment centered on dedicated high-performance computers. It plans to secure 4.2 million data items early by next year.

To enable materials researchers and companies to use the collected research data more conveniently, it will provide three major services: "materials exploration and design," "process development," and "measurement and analysis."

It will designate and operate a national materials research data center and prepare guidelines for data sharing and utilization.

Approval of Cooperation Models Between Demand and Supply Companies

The government approved a total of five cooperation models between demand and supply companies at the 5th committee meeting. Combined with the 12 models approved at the 2nd to 4th committee meetings, there are a total of 17 models. The working-level task force proposed three models, and the large and small-medium enterprise win-win council proposed two.

The three models discovered by the working-level task force target items such as core modules in the machinery sector, high value-added optical and point adhesive chemical materials, and parts and materials for semiconductor inspection probe cards.

These are essential items for the supply chain of our key industries but are entirely or mostly dependent on foreign countries.

In particular, these models include establishing joint ventures between demand and supply companies, cooperation between supply companies and multiple demand companies, and equity investment by demand companies in suppliers.

The government plans to provide customized package support including R&D and policy finance, manpower and infrastructure, and regulatory exceptions (such as special extended work permits) after appropriate financial adjustments.

Participating companies requested about 10 billion won in R&D support and 15 billion won in policy finance for facility investment over three years.

The two models proposed by the win-win council involve materials and parts in the electronics sector with high import dependency. These projects are expected to enable short-term commercialization and strengthen the capabilities of small and medium enterprises through cooperation between large and small-medium enterprises and government support.

An official from the Ministry of Trade, Industry and Energy said, "Through these five cooperation models, we expect about 1,000 new jobs and approximately 135 billion won in new investment by 2025," adding, "We will faithfully implement support to ensure that the cooperation models lead to actual results."

The government will continue to discover models reflecting the characteristics and ecosystems of each item, such as business restructuring, public procurement, and cooperation between different industries, and boldly support expanding "solidarity and cooperation" throughout industrial policy based on the experience of materials, parts, and equipment cooperation models.

This content was produced with the assistance of AI translation services.