Minister Han Seong-suk of the Ministry of SMEs and Startups said on the 23rd that she would support small and medium-sized manufacturing corporations in using artificial intelligence (AI) to boost productivity, prevent industrial accidents, and grow into "real strong small giants" that attract young people.
The Minister attended the "2025 SME Leaders Forum" held at Lotte Hotel Jeju that afternoon and gave a lecture on the theme of "Smart manufacturing innovation 3.0 to be opened by AI."
The SME Leaders Forum is a venue where more than 400 heads of small and medium-sized corporations participate to discuss management strategies and future visions.
The Minister noted, "Manufacturing is the core growth engine of the Republic of Korea's economy." She added, "Now we must innovate with AI beyond digital transformation, and we can no longer delay smart manufacturing innovation," emphasizing, "Through this, we must strengthen competitiveness in quality and delivery deadlines."
There are more than 630,000 manufacturing corporations in Korea, and only about 160,000 of them have factories. However, the adoption rate of smart factories is only 19.5%, and more than half of the adopting corporations remain at a basic level. The share of highly advanced smart factories is just 0.6%.
About half of small and medium-sized corporations cited "lack of investment expense" as the biggest obstacle to adopting AI. A shortage of application services (31.3%), limits in data and information (13%), and insufficient IT infrastructure (6.3%) were also noted as major difficulties.
The Ministry of SMEs and Startups believes that improving processes through the introduction of smart factories helps reduce defect rates, meet delivery dates, and boost sales.
The Minister explained, "If we do not change (with AI) for the future, we could become aging small and medium-sized corporations," adding, "The ministry is also discussing how we can help and is seeking to prepare measures."
First, the ministry will push for a policy shift to "smart manufacturing innovation 3.0." Smart manufacturing innovation 3.0 entails fully introducing AI to manufacturing sites to automate production processes and building an ecosystem that can standardize and utilize manufacturing data.
In addition, through interagency cooperation, it will support the introduction of smart factories optimized for industries specialized for small and medium-sized corporations and will also promote region-specific smart factories by selecting outstanding manufacturing corporations by local government.
To spread the outcomes, the ministry will push to enact the "Smart Manufacturing Industry Promotion Act." It plans to introduce a smart manufacturing technology corporations designation system and systematize AI capability assessments, customized consulting, and research and development (R&D) support.
It plans to foster them into global specialized corporations by providing tailored support for each growth stage, from startup to venture investment, market expansion, and overseas advancement.
The Minister said, "We will also focus on soliciting and evaluating solutions on which industries should develop AI going forward to discover promising manufacturing AI solutions."
Next year's budget will also increase. Under the government's draft for next year, the budget related to smart manufacturing is 455.2 billion won, an increase of 207.3 billion won from this year. The budget for AI factory automation rose by 93.0 billion won from this year's 12.0 billion won. New programs were created for manufacturing AI solution and product development and for research and development (R&D) and dissemination of outcomes, allocating 99.0 billion won and 16.6 billion won, respectively.
The Minister explained, "Without R&D, it is difficult to produce good AI solutions, and it is hard for individual corporations to conduct R&D, so the ministry is considering ways to take the lead," adding, "We plan to actively pursue exchanges not only with advanced manufacturing countries but also with countries that need our factory solutions."
She added, "Alongside pushing to enact the 'Smart Manufacturing Innovation Industry Act' within the year, we will establish and announce the 'AI-based smart manufacturing innovation implementation strategy' that includes detailed policy tasks."