The Korean machinery industry maintains price competitiveness and is closely linked to related industries, such as automobiles, aviation, shipbuilding, semiconductors, and displays.

As of 2022, Korea was the world's third largest semiconductor equipment market following China and Taiwan, with a market size of USD 21.51 billion. Growth in high-performance computing and automotive semiconductors is driving the need for enhanced semiconductor fab capacity. The market size is expected to grow as Korea is increasing domestic and US investment.

In 2021, production of Korea's machine tool industry reached USD 4.5 billion, up 6.4% from the previous year to rank 6th in the world while the nation's exports grew by 15.7% year-on-year to USD 2.2 billion and ranked 7th in the world. In the same period, consumption reached approximately USD 3.4 billion and Korea's global market share was 4.3% or 6th largest in the world. The industry has recently enjoyed a renaissance supported by the growth of EVs, medical devices, and defense projects that critically require precision parts. More specifically, the demand is increasing for machining centers, which are high-end machines capable of complex processing in various patterns. Machine tools also known as the mother machine as they process materials such as metals needed for building machines.

Supply capacity of the manufacturing system is expected to further strengthen based on the spread of smart factories, which Korea is focusing on as its main industry, . Smart factories are human-centered, high-tech intelligent factories that integrate the entire production process from product planning to sales with ICT (information and communication technology) to produce customized products at minimal cost and time. Smart factories are distinguished according to the degree of utilizing ICT technologies and ICT capability.

The machinery industry is truly Korea's core industry that ranked No. 5 in terms of production value, No. 1 in terms of the number of businesses, No. 2 in terms of the number of employees, and No. 4 in terms of added-value, among the nation's manufacturing industries.
The average annual growth rate of exports in the past five years (2017-2022) was 2.0%, the average annual growth rate of imports was 0.3%, and the average annual growth rate of the trade balance was 12.0%. A close look at the industry's major products show that in 2022, refrigeration and air-conditioning machinery showed the highest year-on-year growth rate of 11.4% at USD 3.29 billion, followed by machine tools that grew by 9.0% year-on-year to reach USD 2.91 billion, construction machinery that grew by 6.9% to reach USD 7.17 billion, mechanical elements that grew by 2.7% to reach USD 5.57 billion (2.7%), and motors and pumps that grew by 2.2% to reach USD 7.73 billion.

Foreign investment in machinery is centered on semiconductor equipment, and machine tools, which decreased in 2022 from the previous year in terms of the number of investment but continued growing annually in terms of amount. The growth appears to be driven by the raised awareness of the growth potential and high technology of the machinery industry.

Based on the globalization strategy for materials, parts and equipment established by the Korean government's 11th Committee on Strengthening the Competitiveness of Materials, Parts and Equipment in April 2023, the Korean machinery industry – driven by its accumulated experience and the ability to thrive on its own - has prepared a strategy to effectively respond to the rapidly changing global industrial landscape centered on high-tech fields and to grow as a key partner amidst the reorganization of the global supply chain.

The manufacturing equipment industry is drawing attention following the Korean government's announcement in April 2020 of the enforcement of the Special Act on Special Measures to Strengthen the Competitiveness of the Materials, Parts and Equipment Industry (enforced on April 1, 2020), and the Korean government's commitment to foster industrial robots is expected to further revitalize the machinery industry.

As of 2021, 63.1% of all operators in the Korean machinery industry were located in the Seoul Metropolitan Area and Gyeongnam. Gyeonggi accounted for the highest share of the nation's machinery industry or 38.1% while the Gyeongnam machinery industry recorded the second highest share or 13.8%.

Gyeongnam has an excellent machinery industry ecosystem from materials, parts, and finished products with the Changwon National Industrial Complex at the center. DN Solutions (formerly known as Doosan Machine Tools) and Hyundai Wia, which are listed on the world's top 10 machine tool companies in terms of sales, are located in this region. Materials and parts companies, such as SeAH Changwon Integrated Special Steel, Korea Steel, and Korea NSK, are operating in this region and they supply materials and parts to machinery, automobile, aviation, and shipbuilding companies located near Changwon.

Based on the Plan for Revitalizing Regional Innovation Clusters deliberated and approved by the Presidential Committee for Balanced National Development in December 2022, the Korean government allows each city or province to autonomously diagnose the level of its clusters and select the stage of development (Stage 1 or Stage 2). The aim is to strengthen local initiative so that cities and provinces that choose Stage 2 can autonomously design the budget and decide how to pursue the cluster development program. In March 2023, the Presidential Committee for Balanced National Development prepared the Stage 2 Plan for Fostering Regional Innovation Clusters of Cities and Provinces (2023-2027) and finalized the specialized industries that each city and province will foster in regional innovation clusters from 2023. As a part of the Designation of Materials, Parts and Equipment Specialized Industrial Complexes announced by the Korean government in February 2021, Gyeongnam will specialize in precision machinery, which is expected to strengthen the global supply chain of the machinery industry.

1.Excellent human resources
In 2020, Korea ranked 1st in the number of researchers per 1,000 economically-active people with 16.6 researchers (followed by Sweden with 15.82)

2.Closely-linked upstream and downstream industries
In 2020, Korea’s manufacturing sector accounted for 25.4% of GDP, which is the 2nd highest in the world and demonstrates the country’s status as a traditional manufacturing powerhouse.

3.Government initiatives to foster the machinery industry
Designation of regional innovation clusters and promotion of projects to foster materials, parts, and equipment industries (Four metropolitan areas)
* Four metropolitan areas: Gyeonggi (Incheon, Ansan, Banwol, Sihwa), Jeonbuk (Gunsan, Gimje), Daegu, and Gyeongnam (Changwon)

4.FTAs with countries around the world
As of 2022, Korea's FTAs with 59 countries around the world have been signed and are in effect, and agreements with 10+ countries are in progress.