South Korea - Country Commercial Guide
Manufacturing Technology - Smart Factory
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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 intelligent manufacturing operations. Manufacturing is the mainstay of the Korean economy, and it accounts for 25.5 percent of GDP and is responsible for 90 percent of Korea’s exports. More than 80 percent of research and development focuses on manufacturing fields.

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 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.

In June 2019, the Korean government announced a new initiative named “Manufacturing Renaissance Vision” to revitalize and upgrade the innovation drive in the manufacturing landscape, with a long-term vision to realign industries to more value-added strategies. This plan aims to create a smart manufacturing industry by accelerating innovation in industrial structures by applying smartness, eco-friendliness, and convergence. Korean government measures are to cope with fast-paced changes such as Industry 4.0, tighter environmental regulations, and realignment of the global trade environment. According to industry experts, the added value of the manufacturing industry will increase from $437 billion in 2018 to $678 billion in 2030.

To foster smart manufacturing facilities, the Korean government laid out a roadmap for several areas of R&D projects: design technology, IIoT (Industrial Internet of Things) platforms, software-integrated operating techniques, smart sensors, robots, data collection and data processing technologies, and industrial standards. In addition, the Smart Manufacturing Innovation Office 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.

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. Both Korean private and public sectors agreed to increase the number of domestic smart factories, with a goal of having 30,000 such factories operating nationwide with the latest digital and analytical technologies by 2023. Additionally, commitments seek to create 20 smart industrial zones by 2030 as a part of efforts to support the decline of Korea’s working-age population. Under the goal, 2,000 new AI-powered smart factories are planned to be established by 2030 to keep pace with the fast evolution of full digitalization and automation in the era of the Fourth Industrial Revolution.

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 committed to provide support to help train 40,000 skilled workers to operate fully automated manufacturing sites through various educational programs.

In 2022, the Korean government injected $1.9 billion 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 environments that utilize artificial intelligence (AI) optimization 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.

Manufacturing Machinery and Tools

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 2019-2020. 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. U.S. manufacturing technology exports to Korea will maintain stable growth as the country is gradually regaining manufacturing production to pre-pandemic levels. Korea’s machine tool production reached $49.7 billion in 2019, up one percent compared to the previous year. However, machine tool supply and orders fell during 2021-2022 largely affected by the global pandemic that had a significant impact on the machine tool market resulting in reduced demand among manufacturers and closures of production facilities across many industries. In 2022, Korea has the third largest number of machines in the Asia-Pacific region and accounted for roughly 4.1 percent of all installed additive manufacturing systems in the world.

Prospects for the Korean Machine Tool Market         

Table 1: Prospects for the Korean Machine Tool Market         



     (Unit: USD million)


(USD million)


(KRW billion)


1,127 (+20%)

2,198 (+19%)

24,094 (+24%)


907 (-27&) 

1,782 (-31%)

18,312 (-67%)


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%)

Source: Korea Machine Tool Manufacturers’ Association

Machine Tool Imports by Products Category (Unit: USD Million, %)

Table 2: Machine Tool Imports by Products Category  (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 Machine Tool Manufacturers’ Association  

Sub-Sector Best Prospects

Industrial Automation TechnologyIndustrial Machinery ManufacturingAdvanced Robotics and Intelligent Production SystemsHigh Precision TechnologiesAdditive ManufacturingIndustrial Sensors and MetrologyNew Industrial Platform Technologies (e.g., composite materials)Advanced Machine Tools/Machinery and EquipmentIndustrial Internet of Things (IIoT)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 and high-technology 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. companies to be major suppliers of such manufacturing technology, including advancing sectors like high-end automation equipment, industrial robotics, and industrial additive manufacturing. Despite Korean companies’ relatively late adaptation to these subsectors, Korea is anticipated to be a growth market for high-tech equipment and industrial additive manufacturing technologies.


Trade Shows

Seoul International Manufacturing Technology Show (SIMTOS) – Biennial (March 31-April 4, 2024).

  • Intermold Korea 
  • Smart Factory and Automation World (March 27-29, 2024).
  • Korea PACK – Biennial (April 23-26, 2024)
  • Korea Metal Week 
  • Tool Tech & Smart Welding Automation Fair 
  • Carbon Korea
  • International High-Tech Materials & Application Technology Expo 
  • Digital Transformation Fair 

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 Energy (MOTIE)

Local Contact

U.S. Commercial Service Korea    
U.S. Embassy Seoul
188 Sejong-daero, Jongro-gu
Seoul 03141, Korea
Tel: 82-2-397-4535