On Dec. 3 last year, we visited the Daegu-Gyeongbuk Technology Commercialization Headquarters (Daegyeong Headquarters) of the Korea Institute of Industrial Technology (KITECH) in Dalseong County, Daegu. The tour of the research building began with opening one locked door after another. As researchers explained, "Because it is a secure facility, all doors are locked," and once the entrance opened, equipment lined the corridor to the end to fill the "empty segments" of testing and verification that corporations find hard to cover alone.
The first place that caught the eye was a facility that extracts material properties at high temperatures. It was equipment that clamps a metal specimen between devices, sends a current through it to raise the temperature in an instant to around 1,500 degrees, and records behavior during forming as data. Researchers said, "This equipment alone costs about 1.7 billion won, and it goes higher with options."
Next to it were a test setup that suspends parts in the air to extract their inherent vibration characteristics, and a small dynamo (tester) that they said was patented and built for bearing-part testing. Process equipment that connects the ends of "design-manufacture-test," such as plastic and metal additive manufacturing (3D printing) equipment and pressing (sintering) equipment that densifies powder materials under high temperature and pressure, were arranged along the same path. You could see at a glance the entire process of laying down powder layer by layer, melting it with a laser to build up the shape, and then uncovering the prototype like an excavation by removing the remaining powder.
On site, researchers emphasized, "The key is to use government-funded research institute infrastructure to provide constant support for segments where corporations find it difficult to rely on outside requests whenever needed, with expense and time added each time."
The Daegyeong Headquarters runs a project called the Mega Program that ties such a "constant support" system into a long-term cooperation model with regional corporations. The Mega Program is a long-term cooperation model that KITECH operates to help transform regional manufacturing, bringing together 10 regional headquarters nationwide as hubs to form one team with local governments, leading corporations (innovative corporations), partners, and universities. According to on-site explanations, the research period runs from 2024 to 2031, and unlike one-off projects, it promotes technology development, demonstration, and workforce training together with a mid- to long-term perspective. Local governments, government-funded research institutes, and corporations share funding through matching, and the consortium sets goals and budgets together.
As a representative case of this program, the Daegyeong Headquarters highlighted the corporation Pyeong Hwa Valeo, an auto parts maker. Pyeong Hwa Valeo, an affiliate of PHC, was established in 1988 as a joint venture with France's Valeo and has built competitiveness in core transmission parts such as clutch disks, covers, and release bearings. Recently, it has been accelerating the shift from an internal combustion engine-centered product structure to parts for electric and hydrogen vehicles. According to the company, 2024 sales came to 730.4 billion won.
Through the Mega Program, KITECH identifies fields needed in the region, corporations present market and product requirements, and KITECH supports design, processes, and testing based on its researchers and equipment. It is designed not to stop at growing just one corporation but to lift that corporation's partners together so the entire industry group can change its structure.
◇ Lowering new-product risks in auto parts transition with support from government-funded research institutes
Behind the Daegyeong Technology Commercialization Headquarters' choice to specialize in mobility parts lies the regional industrial structure. Daegu and North Gyeongsang have as many as 2,700 auto parts corporations, but many have grown based on internal combustion engine-centered items such as engines and transmissions. The faster the shift to electric and hydrogen vehicles, the greater the demand volatility for existing flagship items.
Jo Yong-jae, head of the Mobility and Robot Parts Group at the Daegyeong Headquarters, said, "We needed to use research personnel and infrastructure to fill the connecting segments so the existing parts industry in the region could move into eco-friendly vehicle parts." The approach envisioned by the Daegyeong Headquarters is a model that first builds transition demand at a "regional anchor (leading) corporation" and spreads those results to its partners.
However, the Daegyeong Headquarters said Pyeong Hwa Valeo was not the "one pick" from the start for the Mega Program. The headquarters said it broadly engaged regional mobility corporations and then selected the innovative corporation through a consortium evaluation process following a local government notice.
Pyeong Hwa Valeo cited a "research base gap" during the transition as the background for seeking Mega Program support. As electrification spread and the growth ceiling for internal combustion engine parts became clear, the need to shift to next-generation businesses grew inside the company, but there was a constraint in that it was difficult to quickly build the design, evaluation, and demonstration capabilities needed to move into core parts for electric and hydrogen vehicles. Pyeong Hwa Valeo raised its business transition to the implementation stage around 2022.
Jang Jin-ho, executive vice president of Research and Development Division 2 at Pyeong Hwa Valeo, said on site, "Pursuing a new product with 100% in-house investment carries high risk, but with KITECH support combined, we judged we could increase development speed and the chances of success." From the standpoint of a corporation racing against deadlines, even prototype fabrication and performance verification are daunting, but if researchers supplement basics such as material and design grounds and evaluation methods, it can reduce trial and error.
The Mega Program's cooperation structure encompasses partners around a leading corporation. To meet the performance demanded by finished carmakers, not only the core parts but also the quality of the lower-tier parts must rise together. According to Pyeong Hwa Valeo, there are about 69 partner companies just in Daegu and North Gyeongsang.
Regarding this, the Daegyeong Headquarters said, "Alongside technical support, we are operating the program in a way that also provides support for process improvement and quality improvement for partners."
◇ One track from materials, design, and mass-production verification to delivery to Hyundai Motor
The keyword the Daegyeong Headquarters emphasized was "from start to finish." It means they can go beyond designing parts and making prototypes to stitch together in one flow everything from material analysis and design support to manufacturing process development, performance evaluation and durability testing, and mass-production verification.
Most of the outcomes from the priming-cooperation stage also lie on this flow. In materials, compensating for the weaknesses of cast iron was presented as a case. Cast iron is hard but prone to brittle fracture under impact, which can create constraints in part design. Researchers improved the material by adjusting alloy elements to reduce these weaknesses, and corporations produced prototypes applying it. To actually use the material in finished cars, procedures such as registering internal corporate standards are required, and it is currently moving into that stage.
Air compressors and bearing technology for hydrogen vehicles were also cited as key pillars. Hydrogen vehicles need to supply air (oxygen) stably to the fuel cell stack, and the air compressor plays that role. The faster this device spins, the more critical the bearings become. On site, gas foil bearings were mentioned. Instead of lubricating with oil, they reduce friction by using the air film formed during high-speed rotation, offering big advantages under high-speed, high-output conditions. Researchers reinforced the design and evaluation basis, and corporations said they are preparing for mass production and next-generation specifications based on this.
According to Pyeong Hwa Valeo, the air compressor developed in 2024 succeeded in mass production and is being supplied to Hyundai Motor's passenger car Nexo, and under a supply contract with Hyundai Motor, it is slated to be supplied to the Xcient and Nexo through 2028.
Development is also underway for electric-vehicle drivetrain parts such as ELD (electronic differential lock) and TVED (torque vectoring electric drive). ELD is a device that locks the differential for a spinning wheel to send drive to the opposite wheel, and TVED is a device that varies the force sent to the left and right wheels in corners to reduce the car's tendency to tuck in or pull to one side.
A plan to upgrade the manufacturing line itself to "artificial intelligence (AI)-based autonomous manufacturing" was also presented. AI autonomous manufacturing here does not mean completely eliminating human involvement; it is closer to an approach that collects process data with sensors and uses AI to detect defect signs or optimize processes to raise quality and productivity at the same time. The Daegyeong Headquarters said it is already pursuing tasks such as applying defect detection algorithms and managing energy based on a Digital Twin of the process (replicating the site in a virtual space for simulation).
◇ Proceeding through local government–government-funded research institute–corporation "matching"… the key is a long-term roadmap
Pyeong Hwa Valeo cited "flexibility" and "follow-up support" as differences of the Mega Program compared with existing R&D projects. Executive Vice President Jang Jin-ho of Pyeong Hwa Valeo said, "When you commission another research institute, many times they only meet the contracted project performance, but KITECH, when needed, assigns relevant experts and goes together to the mass-production stage like after-sales service." He added that, in a reality where corporations, pressed by internal schedules, find it hard to secure basic design grounds or theory, government-funded research institutes provide strong backup in design, analysis, and evaluation.
On site, however, there was consensus that institutionalization based on a long-term roadmap is needed, saying, "Because local government projects are budgeted and evaluated on a one-year basis, it is hard to pursue mid- to long-term efforts." Developing electrification and hydrogen-vehicle parts takes time through design, testing, and mass-production verification, and if the budget is reorganized every year, schedules can be disrupted and corporations' decisions on equipment and process investments can be delayed.
The Daegyeong Headquarters said it views the Mega Program as a long-term project of at least eight years and is discussing with local governments a plan to split it into an "innovative corporation research and development (R&D) track" and a "partner on-site manufacturing technology support track."
What the Daegyeong Headquarters envisions at the end of the Mega Program is not only technology. It said it is discussing a joint department with Kyungpook National University related to mobility parts, and presented a plan to create a virtuous cycle in which talent educated in the region finds jobs at regional corporations by reflecting the capabilities corporations need in the curriculum. Technology learned at regional universities must connect to jobs at regional corporations to respond to regional decline.
On site, there was also talk of making the Pyeong Hwa Valeo case a "representative model." If a leading corporation succeeds in the transition, partners will rise together, and the expectation is that the speed at which the entire regional industry group reorganizes around eco-friendly vehicles could increase.
Seong Ji-hyeon, head of the Daegyeong Headquarters, added, "The Mega Program is not a project that helps only one corporation; it is an umbrella that grows the entire regional mobility parts industry group together," and said, "By bundling technology development and workforce training together, we will create a virtuous cycle in the region."