Korean companies rank among the world's best in memory chips, shipbuilding and power equipment. They have also found new growth engines. The global semiconductor market is projected to exceed $1 trillion, or more than 1,400 trillion won, by 2030. Self-driving cars are forecast to reach $2 trillion by 2035, and humanoid robots $5 trillion by 2050. Each of these is a global market worth more than 1,000 trillion won.
The government has moved as well. It has grouped semiconductors, physical artificial intelligence and AI data centers into "three mega projects," followed by seven SEED sectors including small modular reactors, quantum technology and aerospace, along with a future response fund. A dedicated unit will be set up at the presidential office. This is welcome. Yet it is also disappointing. Even if each side sticks to what it does best, keeping pace with the United States and China is a stretch — so are the two now stepping into each other's territory? Deciding where and when to expand memory capacity is a highly sophisticated management judgment. That belongs to companies.
The government's role lies in areas that have not yet been industrialized. These are fields where no market exists or one is just emerging, and where regulation blocks both supply and demand. More than 500 AI medical devices have won approval from the Ministry of Food and Drug Safety, but fewer than 50 have been assigned a price by the national health insurance system. The rest remain outside the market even after approval. Self-driving cars face a more fundamental problem. The law presumes that a human holds the steering wheel. When the system demands it, the driver must immediately operate the steering device directly, and failure to do so is punishable. Robotaxis that leave the driver's seat empty are illegal outside designated pilot zones.
The core of industrial policy is creating such markets. Once demand exists, capital, talent and infrastructure follow. The government should become the first buyer through its 200 trillion won in annual procurement, redraw regulations so that markets can form, bring together scattered companies on the demand side, and attach incentives through fiscal and tax measures. It is time to shift the weight from clearing supply bottlenecks to creating early demand.
The direction of the seven SEED sectors is right. But the government itself has said that the three mega projects are about today's decisive lead, while the seven SEED sectors are seeds for 10 to 20 years from now. Then who takes charge of five to 10 years out? AI chips, humanoid robots and self-driving cars, all of which will sprout in a big way soon, need more support for early demand creation and a dedicated organization than they have now. Even the 200 trillion won future response fund is tilted toward the mega projects.
The same applies to companies. If they have found several markets worth 1,000 trillion won, they are better off concentrating there and leaving the rest to those who can do it better. In 2014, Samsung handed over its petrochemical and defense businesses to Hanwha. That defense business lifted Hanwha to fifth place among Korea's business groups this year. Why has there been no repeat of the "Samsung moment," when the group shed what was not core and concentrated its capabilities on semiconductors? Why are we still department stores?
In the United States, six of the 10 largest companies by market capitalization were founded after 1990: Nvidia, Amazon, Alphabet, Tesla, Meta, and SpaceX, which rose to sixth place as soon as it listed in June. They grew by digging deep into one industry, not by spreading wide across many. In Korea, old positions are never vacated, so new names cannot rise. Since the turn of the century, not even an internet company has made it into the top 10 business groups. For companies to concentrate on core businesses, mergers and acquisitions must be easier. Legislation redefining the elements of the breach-of-trust offense to protect management judgment should be expedited, and the capital gains and acquisition tax burdens that come with divestitures should be eased.
Let companies handle what they will do well on their own, and simply clear the obstacles. It is time to overhaul a framework that has held up for some 50 years on heavy chemicals, information and communications technology and the chaebol system. The government should focus on new industries, and specifically on creating early demand, and on opening the way for companies to reshape their business structures into globally specialized large firms in the core areas they do best. Industrial policy itself must not be obscured by the dazzling lights of mega projects.
