SK On cuts production risks with 'virtual factory,' boosts US logistics throughput 30%

Digital twins deployed across global production sites

Standard model built to cut losses, ease logistics bottlenecks

AI integration, in-house expertise push toward 'live twin'

An aerial view of SK Battery America [SK On]

SK On is using digital twin technology to boost production efficiency across its global manufacturing network. By replicating actual factories in virtual environments and running simulations before applying optimized operating plans on the ground, the battery maker has achieved measurable gains in logistics throughput at production sites in the United States, Hungary and elsewhere.

Battery industry sources said Thursday that SK On has moved beyond treating digital twins as a simple simulation tool, deploying the technology as a manufacturing decision-making platform to validate investment feasibility and operational stability across its production lines.

Digital twin technology creates a virtual replica of a real factory, mirroring production lines, logistics flows and equipment operating conditions. It allows companies to verify production capacity, logistics flows, equipment quantities and layouts, and operating logic in a virtual environment before introducing new equipment or changing production models.

MOU with Siemens DISW; AGV operations improved at Hungary plant

After a production line is built, unexpected bottlenecks or logistics constraints can emerge, requiring costly retrofits. Such modifications not only add renovation expenses but also force production shutdowns and create supply disruptions. SK On uses digital twins to identify and minimize these risks before actual investment and construction begin.

SK On signed an MOU with Siemens Digital Industries Software (DISW) in 2024 to pursue smart-factory transformation at its global production sites using digital twin software and simulation technology.

At SK Battery America, its sole US production base, SK On established alignment between actual production lines and simulation models, then used that foundation to build a standard model applicable to global sites including those in the US, Hungary and China. The company has since carried out dozens of digital twin-based improvement projects to deepen on-site utilization.

The results are showing up in the numbers. At the US factory, SK On used digital twins to pre-validate warehouse task priorities, lifting logistics throughput by about 30 percent. The company also verified deadlock-prevention logic for reverse logistics flows before deploying it on the floor, improving the stability of production operations. A deadlock occurs when automated guided vehicles (AGVs) or equipment become gridlocked, unable to yield to one another and bringing logistics flows to a standstill.

At the Hungary plant, SK On optimized AGV charging scenarios in the electrode process section, improving logistics throughput by about 10 percent. At the China plant, the company refined AGV routing and operating methods, cutting equipment working time and raising utilization rates.

SK On operates global production sites across South Korea, the US, China and Hungary — with facilities in Seosan; Georgia in the US; Changzhou and Yancheng in China; and Komarom and Ivancsa in Hungary. The company recently launched a standalone factory in Tennessee, further expanding its production base. As that footprint grows, productivity gains from digital twins are expected to translate into improved profitability going forward.

In-house digital twin capabilities deepen; savings reach tens of billions of won last year

SK On's energy storage system products on display at the InterBattery 2026 exhibition [SK On]

SK On is also accelerating the internalization of its digital twin capabilities. The company has continuously upgraded its in-house execution capacity and built a framework that allows it to handle some simulations that previously required outside specialists. Direct cost savings — covering eliminated external consulting fees and on-site testing work — reached tens of billions of won last year, according to SK On.

SK On plans to integrate AI into its digital twin systems to develop more intelligent capabilities. The approach links production-line simulation with AI reinforcement learning, enabling the AI to autonomously explore a range of scenarios — including logistics priorities, routing and equipment operating conditions — and derive optimal operating plans.

Starting this year, SK On will expand simulations that connect process equipment and logistics together. The company also plans to eventually build a "live twin" that synchronizes data from actual factory systems — including programmable logic controllers (PLCs), manufacturing execution systems (MES) and supervisory control and data acquisition (SCADA) systems — with the digital twin in real time. PLCs, MES and SCADA are the core systems underpinning real factory operations, covering everything from equipment control and process management to operational status monitoring.

Where digital twins to date have focused on testing operating methods in a virtual model built to resemble the real factory, a live twin goes further by reflecting the actual factory's operating status in the virtual environment in real time. The goal is to link the physical and virtual factories so that anomalies can be detected and addressed early.

"The core value of digital twins lies in the ability to identify problems and verify optimal solutions in a virtual environment before encountering them on the actual factory floor," an SK On official said. "We will continue to strengthen our manufacturing competitiveness by connecting manufacturing data and operational know-how from our global production sites and adding AI-based analytical capabilities."

eyre@heraldcorp.com