Triple Variables: Trade, Middle East, and AI... Government Conducts Emergency Review of Advanced Industries

Semiconductors and Bio Industries Expand Investment, While Batteries Lag Behind
Industry: "Tax and Financial Support Is Urgently Needed"

Yonhap News Agency

With external uncertainties such as Middle East risks mounting, the government has begun reviewing its response strategies across the entire advanced industry sector.

The Ministry of Trade, Industry and Energy announced on March 19 that it held the 'Advanced Industry Roundtable', where it reviewed the current status of the industries and discussed response strategies with associations representing nine key sectors: semiconductors, batteries, bio, robotics, machinery, displays, heavy electrical equipment, textiles & fashion, and home appliances.

At the roundtable, participants focused on industry-specific investment plans, future preparedness centered on the manufacturing AI transition strategy 'M.AX', proposals to the government, and key response directions.

Industry representatives stated that, despite increasing trade uncertainties and intensifying competition, they are maintaining a proactive investment drive to respond to rising demand for AI. In the case of semiconductors, with domestic demand projected to grow by around 30% this year, investments in local facilities to support AI are accelerating. The bio industry continues its growth trajectory, having achieved a record export value of 16.3 billion dollars in biopharmaceuticals last year and is now expanding manufacturing capacity and securing overseas footholds.

Heavy electrical equipment exports are expected to remain strong, driven by global infrastructure replacement demand, while the battery industry anticipates mid- to long-term demand growth for energy storage systems (ESS) despite facing dual challenges: a slowdown in the electric vehicle market and increased market share from Chinese companies.

The industry sees the AI transition as a core competitive edge and is expanding its application across all sectors. In semiconductors, companies are working with demand-side industries such as automotive, home appliances, robotics, and defense to jointly develop domestic AI semiconductors. In the bio sector, plans are in place to drive AI-based manufacturing innovation from candidate discovery to production. Display and home appliance makers are seeking to secure productivity and competitiveness through AI-driven process innovation and product advancement, while machinery and textile sectors are also accelerating AI adoption to restructure their industries.

Industry representatives called for the introduction of direct tax credit refunds, extension of carry-forward periods for tax credits, expansion of policy financing, and increased support for research and development (R&D). The battery industry proposed a battery ownership separation scheme to ease the price burden of electric vehicles, while the home appliance sector requested the resumption of the Efficiency Rebate Program to boost domestic demand. The textile sector emphasized the need to expand localization of military textiles.

In addition, they conveyed the challenges on the ground, including rising logistics and energy costs due to recent instability in the Middle East and some disruptions in raw material supplies, and called for government-level support.

The government stated its intention to respond to industry proposals through real-time communication. In addition to supporting logistics and liquidity for companies facing export and supply chain difficulties and seeking alternative import sources, the government plans to coordinate with relevant ministries on support measures such as tax, financing, and R&D assistance.

Tailored support for each sector will also be implemented. For semiconductors, the focus will be on securing key technologies for system semiconductors such as AI chips and strengthening the ecosystem. For batteries, the government will support the industry's management improvement and restructuring efforts. For displays, support will be provided for OLED advancement and commercialization of next-generation iLEDs. For the textile and fashion industries, efforts will focus on developing eco-friendly and carbon-based materials to secure future competitiveness.

Kim Sung-yeol, Director General for Industrial Growth at the Ministry of Trade, Industry and Energy, said, "Manufacturing and advanced industries are the backbone of our economy. The government will work closely with the industry to resolve challenges and actively support efforts to secure future competitiveness."

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