Corporate R&D sentiment rebounds, fueled by AI, new businesses

(Image generated by AI)

Corporate sentiment toward research and development (R&D) investment in South Korea is showing signs of recovery, buoyed by expectations for artificial intelligence (AI) and other digital new businesses, along with stronger commitment from management.

According to a survey released Monday by the Korea Industrial Technology Association (KOITA), the R&D investment outlook index for next year came in at 99.7, based on responses from 500 companies operating in-house research institutes. The reading marks a sharp rebound from the 2025 outlook of 79.6, when corporate uncertainty was at its peak, signaling that the steep downturn in R&D spending has eased and conditions are stabilizing.

The index—known as the Research Survey Index (RSI)—measures whether companies expect to increase or reduce R&D investment and hiring. A reading above 100 indicates more firms plan to raise spending than cut it, while a figure below 100 points to contraction. While the investment index remained just below the threshold, the hiring index, which tracks researcher recruitment, rose to 94.9, up sharply from 84.2 a year earlier.

(KOITA)

Companies cited the expansion of existing businesses as the primary driver behind renewed investment, accounting for 30.5 percent of responses. This was followed by opportunities in AI and other digital businesses (19.0 percent) and strong investment will from top management (18.4 percent). By contrast, only 2.3 percent of respondents said they planned to boost R&D spending to address carbon neutrality, despite its prominence as a global policy theme.

(KOITA)

By company size, middle market firms were the most aggressive. Their investment RSI reached 103.1, making them the only group signaling an increase in R&D spending. Large companies (98.1) and SMEs (99.3) were expected to maintain investment levels similar to last year.

Sectoral differences were pronounced. The electrical and electronics industry, which includes semiconductors, stood out as the only sector projecting expansion in both investment and hiring, posting an investment RSI of 110.7 and a workforce RSI of 104.2. Machinery, information and communications, and chemicals also showed positive momentum with investment indices above 100. In contrast, construction (90.0), materials (89.6) and automotive (90.6) industries were expected to remain subdued, with both investment and hiring indices below the benchmark.

“The data capture a clear signal that R&D sentiment, which had sharply contracted amid uncertainty, is moving into a phase of stabilization and easing,” said Kim Jong-hoon, head of the Industrial Technology Innovation Institute (KITI) under KOITA.

Ko Seo-gon, executive deputy chairman of KOITA, noted that companies are likely to continue a strategy of selective and focused investment rather than broad-based expansion. “Creating a business-friendly policy environment will be crucial to sustaining the recovery trend,” he said.