South Korea Country Commercial Guide
Learn about the market conditions, opportunities, regulations, and business conditions in South Korea, prepared by at U.S. Embassies worldwide by Commerce Department, State Department and other U.S. agencies’ professionals.
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Manufacturing Technology - Smart Factory
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Overview

South Korea has emerged as a prominent manufacturing economy over recent decades, and the country is well-positioned to maintain its competitiveness in the “Fourth Industrial Revolution” era (also known as “Industry 4.0”). This resolution emphasizes the integration of digital technologies with intelligent manufacturing processes. Manufacturing remains a core pillar of Korea’s economy, contributing 24.3 percent of the nation’s GDP in 2024 and accounting for 90 percent of its exports. More than 80 percent of the country’s research and development is directed toward manufacturing sectors.

The Korean government is actively encouraging businesses to embrace digital transformation in manufacturing. This initiative is characterized in four strategic keywords: smart, services, sustainability, and platform. These guiding principles reflect the government’s response to rapid technological advancements in Industry 4.0, increasingly stringent environmental regulations, and shifts in the global trade landscape. According to industry experts, the value added in the manufacturing industry in Korea reached $416 billion in 2023.

To foster smart manufacturing facilities, Korean government laid out a roadmap covering several areas of R&D projects, including design technology, IIoT (Industrial Internet of Things) platforms, software-integrated operating techniques, smart sensors, robots, data collection and AI data processing technologies, and industrial standards. In 2019, the Korean government announced a new initiative called the Manufacturing Renaissance Vision to enhance innovation in the manufacturing landscape, with a long-term goal of realigning industries toward more value-added strategies. 

This plan aims to create a smart manufacturing industry by accelerating innovation to industrial structure by applying smartness, eco-friendliness, and convergence. In September 2024, Korean government introduced a new financial initiative offering up to $7.5 billion to support the country’s AI Autonomous Manufacturing Project, which seeks to revitalize Korea’s manufacturing industry by deploying AI-based automation solutions across all manufacturing sectors and addressing the growing skilled workforce shortage. In addition, the Smart Manufacturing Innovation Centers was formed under the Korea Technology and Information Promotion Agency for SMEs to effectively respond to international trends and increase the competitiveness of SMEs by helping them achieve technology innovation and smart manufacturing operations.

Several industry trends are also impacting Korea’s manufacturing technology. The incorporation of IoT devices and automation technologies is enhancing production efficiency through smart manufacturing. Rapid advancements in information technology, 5G, sensors, and nanomaterials, along with the adoption of cyber-physical systems are significantly reducing the costs of advanced manufacturing processes while boosting performance. At the same time, companies face growing pressure to increase productivity and response more dynamically to evolving customer expectations and needs. Korean conglomerates are accelerating manufacturing automation solutions to bolster productivity, profitability, and reduce cost across the supply chain. Consequently, advanced manufacturing environments are shifting from outdated centralized systems to module-based decentralized systems and automated control platforms.

Smart Factory

Smart factory refers to a fully integrated, technology-based manufacturing system that connects the entire production process within a highly digitalized and networked environment. As of 2024, Korea has around 30,000 smart factories in operation nationwide, reflecting both government and private sector efforts to modernize manufacturing with the latest digital and automated technologies to enhance the industry’s competitiveness. Additionally, under the AI Factory Project, the Korean government plans to build more than 100 AI-based manufacturing zones by 2030, focusing on AI, robotics, and next-generation vehicles as a part of its efforts to address the decline in Korea’s working-age population. The scope of application is expected to expand to various fields such as distribution and logistics, beyond the traditional focus on large-scale automobiles and shipbuilding, to keep pace with the rapid evolution of full digitalization and automation in the transformative era of the Fourth Industrial Revolution.

Korea’s Ministry of SME’s and Startups (MSS) focuses on developing sustainable and inclusive supply chain platforms for multiple industries and supporting small and medium-sized enterprises in adopting and expanding 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 also plans to train 40,000 skilled workers to operate fully automated manufacturing sites through various educational programs, while diversifying support measures.

In 2024, the Korean government announced plans to invest $227 million in public-private partnerships to foster smart manufacturing innovation projects, incentivizing SME companies to advance and scale up automated technologies. Consequently, smart factories are increasingly geared toward automated manufacturing environments that leverage artificial intelligence (AI) optimization and real-time monitoring through Industrial Internet of Things (IIoT) devices. Research and testbed projects sponsored by government funds include advancements in big data, cyber-physical systems, smart sensors, wireless networks, and collaborative robots. According to a government plan by the Ministry of Trade, Industry and Energy, ten major sectors are expected to establish 4,500 smart factories each by 2025. Companies operating smart factories with government support have reported a 25 percent improvement in productivity, while the proportion of defective products has declined by 27 percent.

Sub-Sector Best Prospects

  • Advanced Robotics and Intelligent Production Systems
  • Industrial Automation Technology
  • Machine Vision Systems
  • Industrial Sensors and Metrology
  • High Precision Technologies
  • Additive Manufacturing (3D Printing)
  • New Industrial Platform Technologies (e.g., composite materials)
  • Advanced Machine Tools/Machinery and Equipment
  • Industrial Internet of Things (IIoT)
  • High-Performance Computing (HPS) for Modeling, Simulation and Analysis

Opportunities

As Korea continues to cultivate expertise in advanced manufacturing technology to drive productivity and connectivity in its industrial operations, the demand for high value-added, technologically advanced machinery and equipment is projected to grow. The Korean government is making substantial investment in R&D and factory automation, recognizing the critical role that advanced manufacturing technology plays in enhancing economic competitiveness and national prosperity. The focus creates significant market opportunities for the U.S., a leading global producer of manufacturing technology, particularly in sectors like high-end automation equipment, industrial robots, and industrial additive manufacturing. Although Korean companies have been adapting relatively late to these subsectors, Korea is expected to become an increasingly important growth market for high-tech equipment and industrial additive manufacturing technologies.

Resources

Trade Shows

  • Seoul International Manufacturing Technology Show (SIMTOS) – Biennial (April 3-7, 2028)
  • Smart Factory and Automation World (March 3-5, 2027)
  • Intermold Korea (March 9-12, 2027)
  • Advanced Material and Tech Week (AMTEC) (March 24-26, 2027)
  • Korea PACK (March 31 - April 20-23, 2027)
  • Robot Tech Show (June 2-4, 2027)
  • Korea Metal Week (October 28-30, 2026)
  • Tool Tech & Smart Welding Automation Fair (October 27-30, 2026)
  • Carbon Korea (November 4 - 6, 2026)

Key Contacts

  • National Institute of Standards and Technology
  • Korea Machine Tool Manufacturers’ Association
  • Korea Industrial Technology Association
  • Korea Association of Machinery Industry
  • Korea Institute for Advancement of Technology
  • Korea Association of Die and Mold Industry Development
  • Korea Association of Robot Industry
  • Korea Institute for Robot Industry Advancement
  • Korea Smart Manufacturing Office
  • Korea Carbon Industry Promotion Agency
  • Korea Electrotechnology Research Institute
  • Ministry of Trade, Industry and Resources (MOTIR)

Local Contact

U.S. Commercial Service Korea    
U.S. Embassy Seoul
188 Sejong-daero, Jongro-gu
Seoul 03141, Korea
Tel: 82-2-397-4535
office.seoul@trade.gov
https://www.trade.gov/south-korea

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