When Flights Stop, Startup Expansion Stops: Korea’s Middle East Bet Hits Operational Reality

Korean startups expanding into the Middle East are reporting acute operational disruptions after regional conflict involving the United States and Iran effectively blocked air and maritime routes, industry sources and government officials said. Autonomous driving startup Autonomous A2Z told South Korea’s Ministry of SMEs and Startups (MSS) on March 5 that export-related difficulties have stalled plans to establish a joint venture in the United Arab Emirates after airports in the country “effectively shut down.” AI semiconductor firm Rebellions, which set up a Saudi Arabian subsidiary in July 2025, has also paused personnel deployments amid a special travel advisory for Saudi Arabia, and participation in upcoming semiconductor events in the kingdom is now uncertain.

“Most companies that have submitted damage reports are struggling with aviation and maritime transport issues,” a venture industry official said, summarizing the scope of the disruption reported to regulators and support centers.

Operational impacts and immediate consequences

Industry sources described several concrete ways the breakdown in mobility is affecting Korean technology firms:

• Autonomous A2Z warned that Iran’s closure of the Strait of Hormuz has obstructed exports of its autonomous vehicle platform, “Roi,” and that even if shipments reach the UAE, the absence of Korean engineers to supervise unloading, vehicle setup and testing would make local operation difficult.
• Logistics costs are expected to surge: industry estimates cited in government and industry briefings put transportation expenses to the Middle East at roughly 1.5 to four times pre-war levels.
• Rebellions’ plans to scale local operations are on hold because the South Korean government’s travel advisory temporarily prevents direct personnel deployment; the company’s attendance at semiconductor events scheduled this month and next is now uncertain.
• At least one unnamed Korean startup cancelled a proof-of-concept technology project in Riyadh after local collaboration became impossible under current conditions.

The disruptions have been compounded by military demonstrations by Iran that “effectively restrict passage through the Persian Gulf,” while countries including the UAE and Qatar halted flight operations shortly after the conflict began, industry sources said. With both personnel and equipment routes cut off, many pilot programs, demonstrations and joint venture launches are frozen.

Government response and outlook

The Ministry of SMEs and Startups said it is assessing damage through regional export support centers and preparing emergency measures. “As it has not been long since the damage began to occur, we are still in the stage of determining the precise scale of the impact. Once the damage situation and its scope become clearer, we will begin providing support,” an MSS official said.

Officials are preparing emergency management stabilization funds to address potential liquidity stress and reviewing support to offset sharply rising logistics costs. But government sources and industry observers caution that financial aid cannot immediately substitute for the on-site technical presence required by hardware-heavy and deep-tech startups.

For Korean companies whose Middle East strategies rely on on-site pilots, assembly and engineering supervision—sectors such as autonomous mobility, semiconductors and industrial technology—the current situation is a waiting game governed by geopolitical timelines beyond their control. Firms that can deliver software and data services remotely may fare better in the near term, while those dependent on physical access face an uncertain road back to active expansion.