The South Korean government has newly designated key hubs for the materials, parts and equipment industry to respond to supply chain reshuffling. The Ministry of Trade, Industry and Energy said on Wednesday it held the 18th Committee for Strengthening the Competitiveness of Materials, Parts and Equipment under Minister Kim Jung-kwan (김정관) at the Export-Import Bank of Korea and selected South Gyeongsang (shipbuilding), Daejeon (defence), North Jeolla (semiconductors) and South Chungcheong (semiconductors) as third-phase specialised clusters.

Four sites were finally selected after a review committee and a specialised panel examined 16 development plans submitted by 11 cities and provinces. The ministry said key evaluation items included the expected effect of clustering and competitiveness gains, the ability to secure foundational infrastructure, links with major local industries, the ease of securing specialised talent and alignment with local government urban and industrial plans.

The latest selection was made to raise the completeness of domestic supply chains in line with regional growth drivers such as the five-pole, three-special growth engine. In the first phase in February 2021, it designated semiconductors (Yongin), secondary batteries (Cheongju), displays (Cheonan), precision machinery (Changwon) and carbon materials (Jeonju). In the second phase in July 2023, it designated semiconductor equipment (Anseong), power semiconductors (Busan), bio (Osong), future vehicle motors (Daegu) and autonomous vehicle parts (Gwangju).

Private investment totals 7.7 trillion won, comprising 1.5 trillion won for shipbuilding, 1 trillion won for defence, 830 billion won for North Jeolla semiconductors and 370 billion won for South Chungcheong semiconductors. Of that, investment by demand companies accounts for 4 trillion won. The government plans to invest a total of 160 billion won over five years, about 40 billion won per cluster, for R&D, infrastructure and workforce training. Central and local governments also plan to jointly support companies with difficulties related to permits, regulations and policy financing. In the first- and second-phase clusters, 15 key technology development projects and investment worth 11.5 trillion won are also continuing.

Minister Kim said the new specialised clusters would serve as key production bases and hubs for balanced growth as South Korea establishes itself as an indispensable industrial powerhouse amid global supply chain and industrial reshuffling. He said the government would also provide full support so the country can secure and advance super-gap technologies in its key industries and private investment can proceed smoothly.