Korean startups are facing mounting obstacles in their Middle East export operations as the war between the United States and Iran spreads across the region. With sea and air routes to the Middle East now blocked, startups that had secured hard-won opportunities in areas such as autonomous driving are seeing their local operations plunged into uncertainty.
According to the venture industry on the 5th, Autonomous A to Z, a startup developing autonomous vehicle systems, recently reported export difficulties related to the Middle East conflict to the Ministry of SMEs and Startups. The company specifically appealed to the ministry that its plans to establish a joint venture in the United Arab Emirates have been disrupted. With UAE airports effectively closed, the company can no longer send Korean employees, causing problems in early-stage operations.
Iran's blockade of the Strait of Hormuz has also created obstacles for Autonomous A to Z's exports of its autonomous vehicle "Roy." Even if logistics operations resume, the company cannot manage its vehicles without being able to dispatch Korean staff needed for unloading and operation. Transportation costs are another concern. Industry sources estimate that Middle East logistics costs will increase 1.5 to 4 times compared to pre-war levels.
Other startups are also sensing potential damage. Rebellions established a Saudi subsidiary in July last year and began ramping up local operations. However, the government's special travel advisory for Saudi Arabia has blocked direct personnel deployment for the time being. Participation in semiconductor-related events scheduled in Saudi Arabia this month and next has also become uncertain. Another startup reportedly had to cancel a proof-of-concept project with a local partner in Riyadh, the Saudi capital.
The main difficulty for these companies is the disappearance of transportation to the Middle East. Iran is conducting military demonstrations while blocking the Persian Gulf. Not only Iran, but also non-belligerents such as the UAE and Qatar have suspended flight operations since the outbreak of war. With routes essential for personnel and material exchange cut off, Middle East operations have no choice but to halt. A venture industry official said, "Most companies that have filed damage reports are struggling with aviation and shipping problems."
The Ministry of SMEs and Startups is assessing the extent of damage to small and venture companies through regional export support centers. The ministry is preparing emergency business stabilization funds to address liquidity crises while also considering support for the surging logistics cost burden. A ministry official said, "We are at the stage of determining the exact scale since the damage occurred recently," adding, "We will begin providing support as soon as the situation and scale of damage become clearer."