“Members were very engaged in the policy discussion. Many asked questions of those around them about things they didn’t know. I believe we will see significant changes ahead.”
At the '2026 Small Business Leaders Forum' hosted by the Korea Federation of Small and Medium Enterprises, which concluded on October 23, the main focus was on Physical AI.
Kim Ki-moon, who has led the federation for 16 years, noted that he felt a strong interest in Physical AI among the 400 representatives from various small businesses across the country who attended this year's forum.
Many small business leaders showed great interest in the humanoid robot showcased by the robotics software company CloBot. They asked specific questions to CloBot representatives, such as “How much weight can the robot lift?”
Business leaders, well aware of the productivity improvements that technological advancements can bring, recognized that the adoption of Physical AI and AI transformation (AX) is an urgent issue. However, most felt overwhelmed about where to start.
In this transitional phase of significant industrial restructuring, the Ministry of SMEs and Startups announced the 'Strategy for the Expansion of Physical AI in Small Manufacturing' on October 29, which is timely and provides a clear roadmap.
The government stated it will invest over 5 trillion won in national resources for smart manufacturing innovation by 2030, promoting a '3X strategy' that integrates digital transformation (DX), AI transformation (AX), and robotics transformation (RX). Strengthening the foundation of small manufacturing businesses is essential for South Korea to become a leading country in Physical AI.
South Korean small manufacturing companies have steadily built their digital capabilities through initiatives like smart factory construction. However, when it comes to integrating AI and robotics, they often face significant investment burdens and a lack of skilled personnel.
In response, the Ministry of SMEs and Startups announced a 'Strategy for the Expansion of Physical AI in Small Manufacturing' centered on four pillars: AI transformation for adopting companies, nurturing technology supply companies, creating a virtuous cycle of manufacturing data, and expanding regional and workforce bases.
Particularly noteworthy is the paradigm shift in data usage. The government has redefined manufacturing data, which was previously just a record of production sites, as a 'strategic asset for AI innovation.'
Industry experts cite the connection and utilization of data as a key factor in the success of AI transformation. The need for collaborative manufacturing data construction through cooperatives has also been consistently raised.
The plan to enhance the existing AI manufacturing platform (KAMP) into 'Manufacturing AI 24' aims to establish a 'virtuous cycle system for manufacturing data' that encompasses data collection and standardization, assetization, AI model development, and reapplication in the field. This approach is practical and structural. By recognizing data as in-kind contributions in government support projects through data value assessment, it also provides a tangible incentive to reduce cash burdens on companies.
Moreover, this policy is significant in that it adequately reflects the voices from the field. Lee So-young, the Minister of SMEs and Startups, who was appointed on September 22, has actively listened to small business concerns regarding Physical AI through her subsequent field visits.
On October 13, Minister Lee visited the small manufacturing company Diphamstech to observe how digital transformation and AI are applied in actual production processes. During this visit, discussions arose about the achievements of smart factory implementation, challenges in securing skilled personnel during the adoption process, and the need for phased support policies to enhance capabilities.
For South Korea's AI innovation to succeed, small businesses, which account for 99% of the country's enterprises and are responsible for 80% of employment, must lead the way. If the 'Strategy for the Expansion of Physical AI in Small Manufacturing' is successfully implemented, the small manufacturing sector, often seen as oil-stained, could transform into a dynamic proving ground leading the global AI market.
* This article has been translated by AI.
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