Invest KOREA

Originally developed for military use, drones were rarely used for civilian purposes in the past. Recently, however, the civilian drone market is showing rapid growth, as the technology continues to evolve through a convergence process that has produced drones for both commercial and recreational use.

So what has sparked this change? First, drones have become highly mobile. By human control, drones can now freely roam across the sky without making a sound. Precise control of its movement in a three-dimensional space has enabled us to utilize the sky at a much closer distance.

Second, drones embody the latest advances in technological convergence. Drones operate on complex systems that bring together hardware and software, telecommunication technology and cultural content. The technological convergence necessary to create such systems is expected to benefit other industries, leading the world economy toward a new model of growth.

Teal Group’s 2016 World Civil UAS Market Profile and Forecast

Source: Teal Group (2016)

According to Teal Group’s 2016 World Civil Unmanned Aerial Systems Market Profile and Forecast, the civil government drone market, although still small, is showing slow but steady growth, while the commercial drone market is expected to grow at a rapid pace of 32.6 percent/year, reaching USD 6.5 billion in 2025, 17 times the scale of the USD 390 million in 2016. The group expects the market for consumer drones (for general leisure and recreational use) to stop growing in 2019, and be surpassed by the commercial drone market in 2021.

Meanwhile, Euroconsult predicts that while the markets for professional RPAS (remotely piloted aircraft systems) manufacturing and services will both grow significantly in the next ten years, services will end up accounting for over 2 to 5 times the scale of manufacturing.

The commercial application of drones is expected to accelerate at a significant pace, spurred on by further technological progress and greater support from governments across the world.

In terms of industrial structure, Korean makers of finished aircrafts can be divided into companies that develop their own manufacturing technology, and those that assemble foreign-made parts. Those in the former category own original technology, such as navigation and control software, but also use foreign-made general-purpose parts, mostly imported from China.

For software, Korean and foreign products are currently in fierce competition, with Korean companies actively engaged in developing their own core software.

The domestic market for after-sales services is still small, but is expected to grow along with the expansion of the market for drone-related services.

From an industrial diagnosis perspective, companies that manufacture medium to large unmanned aircrafts have a secure pool of research personnel and strong technological capability. Companies that make small unmanned aircrafts, however, still have much room for improvement in scale and in technological prowess.

For drone parts and systems, most companies have reached the level of developing parts necessary to build their own systems, creating a good environment for new parts makers to establish themselves in the industry.

In the software industry, while Korean companies are capable of making software for drone parts, software for processing data collected by drones, indispensable to expanding the commercial drone market, is still in its infancy, with infinite potential for improvement in the future.

Drones have also benefited other industries in Korea, particularly in agriculture, where fertilizer drones are gaining ground as a viable option for spreading manure. The application of drones in other service industries is still in the nascent stage.

It was the semiconductor industry that paved the way for Korea’s recent progress in drone manufacturing technology. In 1992, a Korean company developed the world’s first 64-megabyte DRAM, lifting the country that year to first place in the global DRAM market. It is not an exaggeration to say that the investment in semiconductors 30 years ago is the reason Korea maintains its status as an IT powerhouse to this day. What started out as the IT industry evolved into the ICT (information and communications technology) industry, and is now rapidly transforming into an industry for the Internet of Things (IOT).

The drone industry can be summed up as the convergence of different industries. Nurturing expertise in a narrow field, therefore, will not suffice. Support has to be given across different industries, to improve aviation technology, hardware, flight control technology, and manufacturing infrastructure (for higher cost-effectiveness). Hence, the drone industry is considered key to the so-called “fourth industrial revolution.”

There is one area in which Korea has always led the world: education. Korea boasts the finest education infrastructure for cultivating world-class professionals, which, if properly utilized, could help the country navigate through global economic uncertainty and establish a new industrial backbone for the future.

Active discussions on the drone industry are currently taking place across Korea, with meetings on drones taking place frequently, as well as efforts to draw up a plan for how the industry should develop. The country is also trying to listen to the public, and actively solve any problems that may arise as the industry takes shape. Popular topics at the meetings include the current state of drones in Korea and abroad, the scale of future markets, employment outlooks and measures to promote the drone industry. With discussions on drones advancing at an alarming rate, it is now time for Korea to start building a basic strategy that befits the current state of the Korean drone industry.

Today, China is clearly leading the world in drone manufacturing. However, I am confident that Korea can also become a pioneer in the industry by taking advantage of its own IT and ICT resources.

If Korea cooperates with China, and combines its technology with the latter’s high productivity potential and financial power, it won’t be long before numerous jobs are created, and companies become industry leaders.

Park Seokjong
Chairman, Korea Drone Industry Association
ttwopark@hanmail.net