As the conflict between the United States and Iran drags on, fortunes are diverging among domestic startups and small and midsize corporations. Startups benefiting from security gains are enjoying a bounce, such as growing outside interest, while corporations that have long underpinned industry, such as those making plastics and packaging, are facing disruptions in product output due to issues like raw material supply.
According to the startup sector on the 27th, Weplo, a drone and advanced air mobility predictive maintenance artificial intelligence (AI) corporation, is likely to secure Series A funding. After being selected in 2024 for the Defense Acquisition Program Administration's "Defense Innovation Corporations 100," it also signed a business agreement this year with Poland's defense corporation WB Electronics. With the U.S.-Iran conflict underscoring the importance of drones, demand is growing for corporations like Weplo that have technology to predict equipment failures in advance and perform maintenance ahead of time.
Platforms helping defense startups enter the market are also emerging. Deep-tech accelerator Bluepointpartners launched "Raptors," a platform that supports linking startups with the military, government, and defense corporations to aid market entry. The government is also backing defense startup development, in step with the trend of private-sector technology being applied in the defense realm.
Spurred by the Russia-Ukraine war and the recent dispute between the United States and Iran, innovation in the defense sector is being led by private startups. In the United States, Anduril and Palantir are expanding their presence in the military and intelligence fields and leading the defense ecosystem. In Korea as well, with defense exports surpassing $10 billion for two consecutive years in 2022–2023, rising security demand amid international conflicts is dovetailing with continued growth of related startups.
A defense startup official said, "In the past, we hustled to attract investment, but now we're getting many inquiries asking if they can invest," and added, "Domestic drone and robot manufacturers are drawing such high interest that buyers in the Middle East and other overseas markets are probing whether purchases are possible."
The maturation of domestic startup technology is also driving increased investment and more product purchase inquiries. In drones, artificial intelligence (AI), and robots—technologies that can extend into security and defense—China had maintained a technological edge. But security concerns and tighter regulations have limited use and reshaped supply chains. In the meantime, domestic startups have accelerated technological advancement and strengthened competitiveness.
Conversely, some sectors are barely scraping by. Recently, due to rising naphtha prices, small and midsize plastic-making corporations are struggling to procure polyethylene (PE), a key raw material. Because ethylene produced from naphtha is the basic feedstock for PE, shifts in naphtha supply directly affect PE supply. With supplies tightening for both low-density polyethylene (LDPE), used for plastic bags and film, and high-density polyethylene (HDPE), used for containers and pipes, broad production disruptions are a concern.
Packaging manufacturers are in the same position. According to cases filed with the Korea SMEs and Startups Agency (KOSME), Company A, which makes industrial packaging, cut its plant operating rate to 50% from 80%. Company B, which produces agricultural packaging, has about one week of inventory. Disruptions in raw material supply have put the company on the brink of halting operations.
An industry official said, "Major suppliers—large petrochemical corporations—are reducing allotments or canceling some orders," and added, "There are projections that volumes could shrink by as much as 10% after April."
The official added, "Raw material prices have surged, clearly worsening profitability, but we must keep producing under supply contracts with large corporations," and said, "We have to deliver at a loss, yet sourcing the feedstock itself is difficult."