It’s a well-known fact that Korea is home to tech behemoths such as Samsung and LG and also where some of the world’s best-selling cars are made by the likes of Hyundai and Kia. It’s also no secret that Korea has been extremely successful in blending very traditional industries with incredible innovativeness and technical ingenuity to come up with some of the biggest tech breakthroughs of the last few decades.
With lots of cash in their wallets, Korean companies are looking towards the West to find innovative startups to invest in and to further strengthen their tech portfolios. While Koreans aren’t known for risk-taking when doing business, if a company is in one of the sectors below, the chances of gaining investment and securing one (or more) of these giants as your strategic partner are far higher!
If we were to choose one buzzword that dominated the tech industry in Korea since 2014, it would have to be IoT – the Internet of Things. Korean conglomerates and the government alike think of IoT as the new sector through which the country’s electronics industry can rebuild and rebrand itself. The government is working on easing regulations for local IoT startups, and the top players are gearing up to take this new space by storm, announcing R&D initiatives and by making early-stage acquisitions of up-and-coming IoT companies. The playing field is still wide open, and the interest in IoT innovation remains very high.
Semiconductors is a sector that’s been instrumental in elevating Korea to the tech powerhouse position it is now. Despite increasing competition in the region, it is still faring extremely well - it was Korean scientists that broke the miniaturization barrier by making a one-atom-thick (0.25nm) semiconductor. Koreans are also pioneering the use of new materials such as graphene in semiconductor research and manufacturing. With no signs of the demand for semiconductors slowing down any time soon, the technology is always near the top of priority list for the largest Korean corporations and their investment wings.
3. Energy Storage
Korea makes the world’s most advanced lithium-ion batteries, and its top players - Samsung SDI and LG Chemical - are taking the world by storm, offering smartphone, laptop and electrical vehicle solutions, as well as industrial-scale energy storage systems (ESS). Not to be outdone by Tesla, they intend to compete in the residential battery market as well. With R&D investment in li-ion and ESS being one of the highest across all industry verticals, battery-related startups can expect high interest from Korean battery makers. Alternative ESS technologies, including flywheel batteries, are also gaining traction, especially with Korean integrators who specialize in ESS projects.
4. Renewables and Smart Grid
Shaken up by the Fukushima disaster and appalled by China’s constant failure to keep its emissions in check, Korea is on its way to becoming the “cleanest” nation in the region in terms of energy production. Korean companies are active in PV, wind, micro and smart grid projects in the domestic market as well as overseas, steadily building up their know-how and expert reputation. Korea Smart Grid Institute (KSGI) and organizations such as KEPCO and companies like POSCO ICT, LSIS or LG CNS are the engines of this industry’s rapid growth. They actively seek innovative technologies with which to enrich their portfolios, and are open to strategic alliances with foreign firms who have value to add.
5. Fuel Cells
Nowhere in the world is pollution-free fuel cell technology more prominent than in Korea. Local companies such as POSCO Energy, Doosan or Samyoung have been partnering with US and UK firms to create an environment for innovation on both car-use and industrial-scale fuel cells. Korea has the world’s largest fuel cell plant in Hwasung City, and it’s just the beginning of its plan to ultimately derive 10% of energy from hydrogen by 2030. Intralink has been instrumental in signing an agreement between UK’s AFC Energy, and Korea’s Samyoung and Chang Shin Chemical to build an 50MW plant in Daesan, a deal worth USD 1 billion over 10 years (you can read more about in our Korea's renewables blog) Don’t be discouraged by the apparent saturation in the market – there is still plenty of room for new players and outside-the-box ideas.
6. Medical Devices
Medical devices are becoming one of Korea’s fastest growing exports, with the big-league players such as Samsung Medison, Vatech or Ostem Implant, and dozens of local SMEs and startups stirring up the global industry dominated by US and EU companies. Not only device manufacturing, but also creating integrated IT systems for hospitals and medical research facilities, is what Korean companies such as LG CNS are quickly becoming internationally renowned for. Those looking to sell into the leading Korean “med tech” companies will face fierce competition from homegrown entrepreneurs, but the growth potential in the sector is still tremendous.
Korean automakers are largely responsible for the end of “pay a premium for every additional thing you want in your car" era. They introduced things such as GPS navigation, air-conditioning, electric seats etc. as standard in their cars, winning over millions of customers. Hyundai Motor Group has a vast network of subsidiaries and close suppliers that make almost all of their cars’ mechanics, electrics and electronics, and they all continue to innovate at a staggering pace. Every new generation of Korean car comes equipped with new gadgets and gimmicks, but also with increased build quality, safety and comfort. Hyundai’s R&D teams are actively seeking companies offering new car-related technologies, and their M&A departments are quick to approach the more promising ones.
8. Holographic Technology
Perhaps the most futuristic of the techs on this list, holographic technology, has recently become a big interest area for Korean mobile device makers and telcos. The global hologram market is expected to grow, but much innovation is needed to make the technology viable and available to the masses. The main areas that the likes of Samsung and LG as well as KT and SK are looking at involve novel ways of interacting with devices, as well as 3D image projection. While the realization of commercial applications for holograms may still seem like a long way away to many, the mere fact that Samsung has entered the race definitely adds credibility.
9. Mobile E-Commerce
A boom in M-Commerce (Mobile E-Commerce), driven by Korea’s astounding smartphone penetration rate, the world’s fastest Internet and consumers’ demand for a superior shopping experience, has elevated companies such as Coupang from quirky a startup status to becoming a formidable e-commerce offering able to attract billions of dollars in investment. On top of M-Commerce, the Korean market has seen a surge in the demand for mobile advertising solutions, analytics, programmatic ad buying and other parts of the e-marketing ecosystem. Smart technologies able to improve the efficiency of the system, and to bring new revenue streams to the stakeholders, should find themselves at in advantageous position in the M-Commerce arms race in Korea.
Korean companies are now realizing the need for increased innovation on the fintech front as the West is outpacing them. New services, such as DaumKakao’s ‘Kakao Pay’ launched last year, signified the market’s readiness to grow and improve. New investments into fintech have been made, new regulations have been passed and new players on the market have appeared. The key problems that still need fixing include the Internet banking sector’s outdated underlying technologies and security issues, and a more widespread adoption of proximity payment methods. Having said that, innovative fintech companies from abroad should consider Korea as a strategic growth market not to be overlooked.