South Korea to Invest 5 Trillion Won in AI for Small Manufacturing by 2030

The South Korean government plans to invest over 5 trillion won in smart manufacturing innovation by 2030. This initiative aims to integrate and converge data-driven digital transformation (DX) with artificial intelligence (AX) and robotics (RX) through a '3X strategy.'

The goal is to increase the digital transformation rate from 30% to 50% and the AI adoption rate from 1% to 10% by digitally transforming 30,000 small businesses and introducing AI in 6,000 companies.

The Ministry of SMEs and Startups announced the 'Physical AI Expansion Strategy for Small Manufacturing' during the National Policy Coordination Meeting held on October 29 at the Chong Kun Dang factory in Cheonan, South Chungcheong Province.

By 2030, the government plans to expand the number of digitally transformed companies from 18,000 to 30,000 and AI-adopting companies from 600 to 6,000. The initiative aims to connect production equipment and processes with data, allowing AI to analyze and make decisions while robots perform actual tasks, thereby establishing an autonomous manufacturing system.

To achieve this, the government will assess the AI capabilities of small manufacturing firms and provide step-by-step support from initial planning to smart factory construction and post-management. AI transformation will be promoted, particularly in emerging growth sectors such as new security, pharmaceuticals and biotechnology, climate tech, and K-consumer goods.

The government will utilize small manufacturing sites as demonstration spaces for physical AI, promoting integrated demonstrations at the equipment, process, and factory levels. By 2030, it aims to distribute manufacturing robots to over 1,000 small manufacturing companies, supporting demand-specific solutions such as articulated robots, collaborative robots, and logistics robots.

Physical AI will be applied to labor-intensive manual processes and hazardous operations to establish standard models that can be replicated in similar manufacturing environments. Verified standard models for each process will be integrated into a single factory to create a 'smart robot factory' where AI, robots, and data are interconnected.

The government will also disseminate national-level technological developments, such as the 'Everyone's AI Factory Manager' from the Ministry of Science and ICT and the tacit knowledge-based AI model from the Ministry of Trade, Industry and Energy, to small manufacturing sites. 'Everyone's AI Factory Manager' is an unmanned factory operation system based on physical AI, established at the Korea Advanced Institute of Science and Technology (KAIST) with government support.

Additionally, the government will focus on nurturing technology supply companies for smart manufacturing to support AI transformation in small manufacturing firms. A roadmap for smart manufacturing strategic technologies will be established from 2027 to 2029, focusing on four areas: automation, connectivity, informatization, and intelligence. Automation includes robots and equipment, connectivity involves sensors and networks, informatization covers manufacturing execution systems (MES) and enterprise resource planning (ERP), and intelligence encompasses AI and digital twins.

The government plans to reflect the demands of manufacturing sites in technology development and validate developed technologies in actual production environments to enhance the competitiveness and applicability of technology supply companies. Companies with superior technology will be designated as 'smart manufacturing specialized companies' and will receive preferential treatment in government AI transformation support projects, along with concentrated support for technology development, validation, and overseas expansion. The goal is to secure 500 smart manufacturing specialized companies by 2030.

The government will promote the standardization and assetization of manufacturing data to enable its use in AI model development and improvement. It will standardize different data formats and structures across companies and equipment for mutual utilization and establish measures to recognize the economic value of manufacturing data as corporate assets. Notably, manufacturing data will be recognized as in-kind contributions to reduce cash burdens on small businesses participating in government support projects.

The existing AI manufacturing platform (KAMP) will be upgraded to 'Manufacturing AI 24,' which will include AI analysis, simulation, and policy application and management functions. This upgrade aims to collect and standardize manufacturing data, utilize it for AI model development, and reapply it in production environments to establish a virtuous cycle that improves AI performance. The data accumulated in Manufacturing AI 24 will be linked to the physical AI data library being promoted by the Ministry of Science and ICT and the Ministry of Trade, Industry and Energy. Additionally, support will be expanded using regional manufacturing AI data centers and AI demonstration facilities to promote AI adoption among local small manufacturing companies.

The government will also focus on training specialized personnel in manufacturing AI. Educational programs will be conducted at four major science and technology institutes in Daejeon, Gwangju, Daegu, and Ulsan, in collaboration with local industries, providing practical training opportunities for graduates in small businesses. Next year, the government plans to designate 10 specialized contract departments in AI and support small business employees with practical training and degree programs in collaboration with local universities. Furthermore, it will work with industry associations to identify regulatory challenges in manufacturing and strengthen cooperation among relevant ministries and support agencies.

Lee So-young, Minister of SMEs and Startups, stated, "In this era of AI transformation, the innovation of manufacturing AI in small businesses, which are the backbone of our economy and industry, is key to South Korea becoming a leading nation in physical AI. We will actively support small businesses in innovating their production methods and enhancing their technological capabilities by integrating and converging data, AI, and robotics, enabling them to grow into core players in national strategic projects."