Government Launches 'MCE 2.0'... Responding to Major Industrial Transformation with AI, Supply Chains, and Regional Specialization

Five-Year Blueprint for Strengthening MCE Competitiveness Unveiled
Global Leap Forward through AI, R&D, and Specialized Clusters

Amid the global realignment of supply chains and major industrial transformation, the government has unveiled a second-phase strategy for advancing the materials, components, and equipment (MCE) industry. Moving beyond the first-phase strategy, which focused on self-reliance in response to Japan's export restrictions, the new goal is to transition to a "globally leading industrial structure" centered on artificial intelligence (AI), carbon neutrality, and the fostering of advanced industries.

On October 23, the government held the 14th MCE Competitiveness Enhancement Committee meeting and announced the "Basic Plan for Strengthening the Competitiveness of the MCE Industry (2026-2030)."

First, the government will focus research and development (R&D) support on four key areas: ▲ market-leading (advanced products), ▲ market-transforming (high value-added general-purpose products), ▲ regulation-compliant (carbon neutrality), and ▲ supply chain-secured (critical minerals). To this end, by 2030, the government will expand the current materials data pool from 4.3 million to over 15 million entries and open up publicly held AI-based materials development models to the private sector.

Additionally, the government will launch the "AI-Based Five Next-Generation Materials Development Project" for use in extreme environments, and fully implement 15 "Super Eul" projects, each with R&D investments exceeding 20 billion won. The number of "top-tier companies" will also be increased from 100 to 200.

Efforts to strengthen market capabilities will also accelerate. The government will pursue tailored export strategies linked to major national industrial projects such as Korea-U.S. shipbuilding cooperation and India's semiconductor project (ISM). At the same time, it will concentrate public-led investments in five core areas: AI, quantum technology, defense, renewable energy, and aerospace drones. Public demand sources and manufacturing companies will jointly develop technologies, and new domestic markets will be created by utilizing military-specialized testbeds and other initiatives.

To strengthen the ecosystem, the successful demand-supply company cooperation model developed during Japan's export restrictions will be expanded throughout R&D, and a "Top 10 Ecosystem-Based Cooperation Model" will be established, focusing on next-generation strategic items such as semiconductor glass substrates.

Ten additional specialized MCE clusters will be designated, and the existing ten clusters will be upgraded to suit regional characteristics. To support this, the special MCE budget will be set at 2.431 trillion won (government proposal), an increase of 146.7 billion won compared to this year, and private investment will be expanded through the Advanced Industry Fund and the National Growth Fund.

Previously, through the first and second phases of ten clusters, the government achieved 11 trillion won in private investment, 8,000 new jobs, and a 40% increase in exports. The plan is to designate ten more clusters to support the "Five Hubs, Three Specialized Zones" national growth strategy.

The newly designated third-phase clusters will be fully implemented from 2027, following the establishment of plans next year and a project announcement in 2026. Existing clusters will undergo legal revisions to extend their operations.

In these specialized clusters, a "MCE Win-Win Package Agreement" will be introduced, with central and local governments, anchor companies, and financial institutions jointly providing integrated support across all stages, including location, regulation, finance, and workforce. To accelerate digital transformation, "AI Twin Labs" will be established, and offices will be set up in 37 public research institutes to expand R&D hubs within the clusters.

The government plans to amend the MCE Industry Act to clarify the definition, validity period, and evaluation procedures of specialized clusters, and to introduce local government-led planning and annual implementation plans. Through this, the government aims to shift the support system from a central model to a regionally customized one, thereby strengthening the self-sufficiency of local industrial ecosystems.

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