We will lead the AI transformation (AX) of 53,000 small and midsize manufacturing companies and propel South Gyeongsang into the "mecca of manufacturing AI." Furthermore, South Gyeongsang will lead Korea's rise to the "AI top three."
Vice Governor for Economic Affairs Kim Myeong-ju of South Gyeongsang Province met with ChosunBiz in her office on the 15th and said, "AI transition is not a simple adoption of technology but an industrial restructuring that changes the DNA of manufacturing," adding, "Through AI, we will dramatically improve productivity and quality, while simultaneously addressing manufacturing's chronic problems such as an aging population, labor shortages, and industrial accidents."
South Gyeongsang is a core production base of Korea where major industries such as machinery, automobiles, shipbuilding, aerospace, and defense are clustered. Some 53,000 small and midsize manufacturers are concentrated there.
Entering public service by passing the 39th administrative exam in 1995, Kim served in key departments of the Ministry of Economy and Finance, the Presidential Office, as a senior adviser at the African Development Bank, and at the Consulate General in Shanghai, China, before taking office as the province's vice governor for economic affairs in Apr. last year.
After attending CES 2025, the world's largest IT expo, in Jan. with the theme of "combining AI and machinery," Kim concluded that AX for the small and midsize manufacturers that form the backbone of Korean manufacturing is the key to regional competitiveness, and in Jul. established the Department of Artificial Intelligence Industry in South Gyeongsang Province. Kim is now spearheading the province's industrial policy, especially AX for small and midsize manufacturers.
Kim said, "We will foster South Gyeongsang as a forward base for AI-driven manufacturing innovation to support the government's aim of becoming one of the world's top three in AI in the manufacturing sector." The following is a Q&A with Kim.
— Why is AX needed for small and midsize manufacturers in South Gyeongsang?
"Small and midsize manufacturers are facing dual challenges from intensifying global competition with overseas corporations, including China, and chronic hiring difficulties. The most effective solution that can tackle both issues at once is to apply AI technology to manufacturing.
For example, introducing AI into defect inspection processes can enhance product competitiveness with far more accurate inspections than humans, and redeploying inspection personnel to other processes can help ease labor shortages. Times have changed, and we must respond to sustain growth. To the traditional production function centered on labor and capital, AI is now being added, and productivity gains are emerging in a breakthrough way."
— There is an assessment that South Gyeongsang is the optimal place for manufacturing AX.
"Some 53,000 small and midsize manufacturers are clustered in South Gyeongsang. Excluding the Seoul metropolitan area, it is Korea's largest manufacturing hub. The scale of the aerospace, shipbuilding, defense, and nuclear industries is the largest in the country, and the machinery industry is the second largest nationwide. The automobile industry also ranks near the top. Virtually all manufacturing sectors are concentrated here, and with vertical integration among large, midsize, and small companies, we have a structure that can quickly generate AI transition effects and spread them across the region."
— What is the current level of AI adoption among small and midsize companies in South Gyeongsang?
"South Gyeongsang has 3,055 smart factories, the second-highest number in the country. Among them, about 690 companies are at intermediate level 1 or above, making them able to transition to AI quickly. Much of the foundation is already in place, and it is important to link this to AI transition. Applying AI to small and midsize manufacturers across the board has limits. We are pursuing a strategy of applying AI first to prepared companies to create success stories and then spreading them to other companies."
— What is the biggest bottleneck to AX in manufacturing on the ground?
"Ninety-eight percent of small and midsize manufacturers in the province agree on the need for AI transition. However, companies lack in-house AI capabilities and specialized talent, and the initial expense burden is heavy, so they hesitate to adopt it. Bridging this gap is the role of the central and local governments."
— What are South Gyeongsang's strategies for AI transition and industrial development?
"Aiming to become the "mecca of manufacturing AI," South Gyeongsang is focusing all efforts on expanding infrastructure, cultivating talent, developing and demonstrating super-gap technologies, and fostering strong AI small and midsize companies. We established the Department of Artificial Intelligence Industry to create a dedicated system and secured 12 AI-related national projects this year. We have secured a total project budget of 1.1301 trillion won. Starting next year, we are planning annual investments of 200 billion to 250 billion won. We will also complete the five-year basic plan for fostering the AI industry in South Gyeongsang within the year and push it in earnest from next year. South Gyeongsang will lead so that small and midsize manufacturers can achieve sustainable global competitiveness through AI transition."
— South Gyeongsang was recently selected for the Ministry of SMEs and Startups (MSS)'s "region-led AI transformation" project.
"This is one of the core projects of South Gyeongsang, the mecca of manufacturing AI. We will build essential infrastructure for AI transition and, based on this, lead the AI transition of regional small and midsize companies. We will build the "South Gyeongsang Manufacturing AI Data Center" in Palyong-dong, Changwon, by the first half of 2026 and open it 24/7 to small and midsize companies in the province. At the same time, we will operate the "South Gyeongsang Manufacturing AI Support Group," consisting of more than 80 AI solution companies and research institutions inside and outside the province, to provide close, customized AI transition support for each company."
Kim emphasized the role of the South Gyeongsang Manufacturing AI Support Group, which supplies AI solutions.
Kim said, "We will select outstanding AI solution companies not just in South Gyeongsang but also in other regions such as Seoul, and enable them to take on AX for manufacturers in the province," adding, "The support group will provide one-stop support from consulting to on-site customized system design and demonstration."
Kim added, "In the long term, we also aim to export the manufacturing AX systems built in South Gyeongsang overseas in a packaged form."
— What are the tangible results?
"We are still at the beginning, but AI use cases are emerging one by one. Results by small and midsize auto parts manufacturers are particularly notable. One company introduced an AI inspection process, improving inspection accuracy by 80% and speed by 66%. As a result, sales increased by 33%. Another auto parts manufacturer applied AI to forging processes and cut annual energy expenses by about 10%. We will continue to spread such success stories."
— The strategy to train AI talent is also a key pillar.
"The key is to cultivate AI talent needed by companies directly in South Gyeongsang and deploy them to the field immediately. In connection with four universities in the province—Inje University, Gyeongnam National University, Changwon National University, and Gyeongsang National University—we are systematically training AI talent based on corporate demand. In particular, starting next year, we will run the "AI Innovation Academy" to produce 150 top-tier AI talents annually. We will nurture practical talent that can be put to work right away."
— You are also pushing cooperation on AX between large companies and small and midsize companies.
"Connecting the capital and technological prowess of large companies with the shop floors of small and midsize companies is also important in manufacturing AX. In cooperation with Doosan Enerbility and LG Electronics in the province, we are pursuing AX demonstration projects to boost productivity and quality across the supply chain. In the case of Doosan Enerbility, we are applying AI to the gas turbine assembly process, which assembles more than 40,000 parts supplied by 150 partner companies, to radically improve productivity through data sharing and collaboration. With LG Electronics, together with the Ministry of SMEs and Startups (MSS), we are discussing a project to support AI adoption by small and midsize manufacturers in the province. The central government, large companies, local governments, and small and midsize companies must act as one team and actively pursue manufacturing AX."