South Korea - Country Commercial Guide
Manufacturing Technology - Smart Factory

This is a best prospect industry sector for this country. Includes a market overview and trade data.

Last published date: 2021-08-13



South Korea has emerged over the past several decades as a leading manufacturing economy and the country is in an optimal position to remain competitive in the era of the “Fourth Industrial Revolution” (also known as “Industry 4.0”), which entails the convergence of digital technologies and manufacturing industries. In Korea, this convergence of automation and data exchange in manufacturing technology is referred to as “Manufacturing Industry Innovation 3.0.”

The Korean Government is urging businesses to adapt to the new direction of digitalization of manufacturing and has characterized the initiative with four keywords: smart, services, sustainability, and platform. In June 2014, the Manufacturing Industry Innovation 3.0 strategy was introduced as part of Korea’s Creative Economy Initiative. Manufacturing 3.0 focused on the concept of a smart factory collectively embracing automatization, data exchange, and enhanced manufacturing technologies throughout the manufacturing process, incorporating both short- and long-term technological plans. The government laid out a roadmap for several areas of R&D projects: design technology, IIoT (Industrial Internet of Things) platforms, technology to sort out defective products, software-integrated operating techniques, smart sensors, data collection and data processing technologies, and industrial standards. In addition, the Smart Factory Standard Research Council was formed within the private sector to effectively respond to international trends and activities and to undertake efforts to standardize locally developed regulations.

A number of trends in the industry are also affecting Korea’s manufacturing technology. Rapid advances in information technology, 5G, sensors, and nanomaterials, as well as the application of cyber-physical systems, are dramatically lowering the costs of leading-edge manufacturing processes and improving performance. At the same time, companies are under mounting pressure to improve their productivity and become more responsive to changing customer expectations and needs. Korean conglomerates are accelerating manufacturing automation solutions to bolster productivity and profitability and reduce costs across the supply chain. As a result, advanced manufacturing environments are evolving from outdated centralized systems to module-based decentralized systems and automatically controlled platforms.

Smart Factory

A smart factory refers to a fully integrated technology-based manufacturing system, which connects the entire production process. In 2017, the private and public sectors of Korea agreed to increase the number of domestic smart factories, with a goal of having more than 30,000 such factories operating with the latest digital and analytical technologies by 2022. Korea’s Ministry of Trade, Industry and Energy (MOTIE) has reinforced the government’s plans to support small and medium-sized enterprises to help them adopt and expand smart factory technologies. More than 99 percent of companies in Korea are small and medium-sized businesses, and government data shows that exports from SMEs continue to increase. The government will provide support to help train 40,000 skilled workers to operate fully automated manufacturing sites through various educational programs, while diversifying support. The current target of 30,000 smart factories by 2022 was increased from the previous goal of 10,000 by 2020, to keep pace with the fast evolution of full digitalization and automation in the era of the Fourth Industrial Revolution.

In 2020, the Korean government injected $414.4 million into R&D projects to incentivize SME companies to advance and upscale automated technologies. As such, smart factories are more geared towards having automated manufacturing facilities that utilize artificial intelligence (AI) and real-time monitoring using Industrial Internet of Things (IIoT) devices. Research and testbed projects to be sponsored by government funds include big data, cyber physical systems, smart sensors, wireless networks, and collaboration robots. Ten major sectors will each have 4,500 smart factories by 2025, according to a government plan by MOTIE. Those companies operating smart factories after receiving funds from the government indicated that their productivity improved by 25 percent, while the proportion of defectives dropped by 27 percent.

Advanced Manufacturing 

According to the Manufacturing Technology Top Markets Report by the International Trade Administration, South Korea ranks seventh in terms of the United States’ projected top markets for 2018-2019. U.S. manufacturing technology exports to Korea will remain stable through 2020-2021. Export growth of manufacturing technology, broadly categorized as the equipment used to produce other equipment, is largely tied to economic growth in industrialized markets, particularly in Korea.  Korea’s machine tool production reached $49.7 billion in 2019, up one percent compared to the previous year. In 2019, Korea accounted for roughly 4.1 percent of all installed additive manufacturing systems in the world and has the third largest number of machines in the Asia-Pacific region.  

Prospects for the Korean Machine Tool Market (Unit: USD Million)






1,243 (-2.0%)

2,600 (+3.0%)

57,100 (+1.0%)


1,269 (-5.4%)

2,528 (+7.5%)

56,538 (+3.0%)


1,341 (+10.5%)

2,352 (+16.4%)

54,892 (+6.6%)


1,214 (-13.7%)

2,020 (-13.7%)

51,493 (-13.2%)


1,407 (-5.9%)

2,342 (+4.7%)

59,297 (+0.9%)

Source: Korea Machine Tool Manufacturers’ Association

Machine Tool Imports by Products (Unit: USD Million)










 NC Lathes









 Machining Centers


















 Boring Machines (incl. NC)









 Grinding Machines (incl. NC)









 Milling Machines (incl. NC)









 Non-NC Lathes









Source: Korea Customs Service, Korea Machinery Manufacturers’ Association  

Sub-Sector Best Prospects

Automation Systems
Industrial Machinery Manufacturing
Industrial Internet of Things (IIoT) and Virtual Plants
Additive Manufacturing
Advanced Robotics and Intelligent Production Systems
New Industrial Platform Technologies (e.g., composite materials)
High Precision Technologies
Advanced Machine Tools/Machinery and Equipment
High Performance Computing (HPS) for Modeling, Simulation and Analysis

As Korea continues to cultivate expertise in advanced manufacturing technology and seeks greater productivity and connectivity in manufacturing operations, the demand for high value-added machinery and equipment is expected to increase. The Korean government is investing significantly in R&D and factory automation as advanced manufacturing technology becomes even more essential to improving the country’s economic competitiveness and national prosperity. Market opportunities exist for the U.S. being a major global producer of manufacturing technology, including advancing sectors like high-end automation equipment and industrial additive manufacturing. Despite Korean companies’ relatively late adaptation to this subsector, Korea is anticipated to be a growth market for high-tech equipment and industrial additive manufacturing technologies.


Trade Shows

  • Intermold Korea
  • Automation World 2020 and Smart Factory
  • Seoul International Manufacturing Technology Show (SIMTOS) Biennial
  • Korea PACK 2021
  • Korea Metal Week
  • Korea Heavy Equipment Show and Sale for Parts and Attachment
  • Tool Tech 2021
  • Korea International Construction Equipment Exhibition
  • International Advanced Materials & Application Technology Expo (INTRA 2021

Key Contacts

  • National Institute of Standards and Technology
  • Korea Association of Machinery Industry
  • Korea Machine Tool Manufacturers’ Association
  • Korea Industrial Technology Association
  • Korea Smart Factory Foundation
  • Korea Institute for the Advancement of Technology
  • Korea Association of Die and Mold Industry Development
  • Korea Association of Robot Industry
  • Korea Institute for Robot Industry Advancement
  • Machinery Industry Shared Growth Promoting Foundation
  • Ministry of Trade, Industry and Energy (MOTIE)
  • Local Contact

Ms. Jessica Son   
Senior Commercial Specialist         
U.S. Commercial Service, Korea    
U.S. Embassy Seoul          
188 Sejong-daero, Jongno-gu
Seoul 03141, Korea