AI adoption rate among small manufacturers to rise from 1% to 10% by 2030

Manufacturing robots to reach 1,000 firms; 500 smart-manufacturing specialists to be cultivated

Government to standardize factory data and upgrade AI platform

Minister of SMEs and Startups Lee So-young tours a semiconductor production facility at LK Cam in Cheonan, South Chungcheong Province, on Oct. 15. [Ministry of SMEs and Startups]
Minister of SMEs and Startups Lee So-young tours a semiconductor production facility at LK Cam in Cheonan, South Chungcheong Province, on Oct. 15. [Ministry of SMEs and Startups]

The government plans to channel more than 5 trillion won ($3.78 billion) in national resources into smart manufacturing innovation by 2030, aiming to expand the number of small and medium-sized manufacturers that have adopted AI from 600 to 6,000 — a tenfold increase — while deploying manufacturing robots and cultivating specialist firms to transform how small factories operate.

The Ministry of SMEs and Startups unveiled the plan, titled the "Physical AI Diffusion Strategy for Small Manufacturers," at the 16th National Policy Coordination Meeting held Thursday in Cheonan, South Chungcheong Province.

The strategy's core aim is to shift existing manufacturing innovation policy — which has centered on rolling out smart factories — toward an autonomous production model that integrates data, AI and robotics. Physical AI refers to technology that enables AI to perceive and assess real-world environments and directly control physical devices such as robots.

To achieve this, the government will pursue a "3X strategy" linking digital transformation (DX), AI transformation (AX) and robot transformation (RX). By 2030, the digital transformation rate among small manufacturers is to rise from the current 30 percent to 50 percent, while the AI adoption rate climbs from 1 percent to 10 percent. In terms of firm counts, the targets are to expand digitally transformed companies from 18,000 to 30,000, and AI-adopting companies from 600 to 6,000.

The push to accelerate AI adoption in small manufacturing reflects a widening technology gap between large conglomerates and smaller firms. Large companies are already using AI to optimize production processes, while smaller businesses struggle to follow suit due to limited capital and personnel.

According to ministry data, the most commonly cited barrier to AI adoption among small and medium-sized enterprises was insufficient funding, flagged by 35.6 percent of respondents. A shortage of skilled workers (33.4 percent) and inadequate technology and infrastructure (33.2 percent) were also major obstacles.

The government will tailor AI support to each company's technological readiness. Firms at an early stage will receive assistance building smart factories to accumulate data, while more capable companies will be helped to introduce process-specific AI and autonomous factory systems.

A particular focus is laying the groundwork for physical AI adoption through the deployment of manufacturing robots. The government plans to supply articulated robots, collaborative robots and logistics robots to around 1,000 small manufacturers by 2030, alongside support for robot engineering, safety consulting and automation system installation.

Park Yong-soon, director general for SME policy at the ministry, said at a pre-briefing held Wednesday at Government Complex Seoul that support of around 250 million won per company is currently being provided under the manufacturing robot deployment program. The ministry plans to expand pilot projects centered on high-demand equipment such as articulated robots to reduce the financial burden on firms adopting robotics.

Beyond simple robot installation, the government will also run pilot projects applying AI directly to production processes. In labor-intensive sectors such as K-food and K-beauty, skilled workers' techniques will be captured as data and used to train AI-powered robots. In hazardous processes involving high heat and dust — such as casting and molding — robots and safety equipment will be introduced to improve working conditions.

Technologies validated through these pilots will be integrated into individual factories under a "smart robo-factory" model. Under that model, AI monitors production conditions across equipment, processes and the entire plant while robots carry out the work — a fully autonomous manufacturing setup the government intends to demonstrate at scale.

The government will also work to strengthen the competitiveness of the domestic robotics industry. With foreign products, including Chinese-made robots, gaining a larger foothold in the local market, the plan is to support field application and pilot testing of domestically produced robots to build confidence in their reliability.

The ministry also plans to extend the results of national physical AI projects led by the Ministry of Science and ICT and the Ministry of Trade, Industry and Energy to small manufacturers. Technologies such as the Ministry of Science and ICT's AI factory manager program and the Ministry of Trade, Industry and Energy's manufacturing AI tools will be adapted to the specific sectors and processes of small firms.

Park outlined the division of responsibilities among ministries at the briefing: the Ministry of Science and ICT handles foundational technology and AI model development; the Ministry of Trade, Industry and Energy focuses on spreading adoption through anchor companies and their suppliers in each sector; and the Ministry of SMEs and Startups is responsible for distributing technology across the broader small-manufacturer base.

The government will also cultivate companies that supply AI technology. By 2030, it aims to identify 500 outstanding smart-manufacturing specialist firms — spanning automation technologies such as robotics and equipment, sensors and networks, manufacturing information systems, and AI — and support their research and development, pilot projects and overseas expansion.

A formal designation system for high-performing specialist firms will be introduced, with 100 companies to be designated on a trial basis this year and the target growing to 500 by 2030.

The framework for using manufacturing data will also be overhauled. A longstanding complaint has been that inconsistent data formats across companies and equipment make the data difficult to use for AI training. The government will pursue standardization and relational structuring of manufacturing data, and will develop a mechanism to assess its economic value and recognize it as a corporate asset.

In particular, the government plans to allow manufacturing data to be counted as an in-kind contribution in government-funded programs, reducing the cash burden on companies. The existing Korea AI Manufacturing Platform, known as KAMP, will be upgraded and rebranded as "Manufacturing AI 24," with the goal of creating a virtuous cycle in which data is collected, AI models are developed and the results are fed back into the production floor.

However, protecting companies' trade secrets and proprietary technical information during the data-sharing process remains a key challenge. "Ownership of manufacturing data rests with the manufacturing company, and the company's consent is required before that data can be used to develop AI models," Park said at the briefing.

The central question for the initiative is whether national-level AI development achievements can translate into real productivity gains for small manufacturers. Given that smaller firms have less investment capacity and fewer specialists than large companies, a support framework covering not only performance verification of robots and AI systems but also ongoing maintenance after deployment will be critical.

The government will also build AI infrastructure and develop skilled workers for regional manufacturers. It plans to link regional manufacturing AI data centers with pilot facilities to support AI adoption by companies outside the Greater Seoul area, and will expand specialized training and on-site internship programs using the four science and technology institutes in Daejeon, Gwangju, Daegu and Ulsan.

"In an era of sweeping AI transformation, manufacturing AI innovation among small and medium-sized enterprises — the backbone of Korea's economy and industry — is the key to establishing Korea as a leading nation in physical AI," SMEs Minister Lee So-young said. "We will actively support small businesses in revolutionizing their production methods and building technological capabilities through the convergence of data, AI and robotics transformation, so they can grow into a core pillar of the national strategic project."


boo@heraldcorp.com