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Overview

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 Korean economy, and it accounts for 30 percent of GDP and is responsible for 90 percent of Korea’s exports. More than 80 percent of research and development are contributed to 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 the 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 smart manufacturing industry by accelerating innovation to industrial structure 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 manufacturing industry will increase from $437 billion in 2018 to $678 billion in 2030.

To foster smart manufacturing facilities, 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 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. Private and public sectors of Korea 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 2022. Additionally, 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 will provide support to help train 40,000 skilled workers to operate fully automated manufacturing sites through various educational programs, while diversifying support.

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 environment 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 2018-2019. 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-crisis level. 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 2020-2021 largely affected by the global pandemic that had a significant impact on the machine tool market resulted in reduced demand among manufacturers and closures of production facilities across many industries. In 2020, 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.

Source: Korea Machine Tool Manufacturers’ Association

Machine Tool Imports by Products                                                                                  (Unit: USD Million)

Source: Korea Customs Service, Korea Machinery Manufacturers’ Association  

Sub-Sector Best Prospects

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

Opportunities

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. being a major global producer of 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.

Resources

Trade Shows

• Seoul International Manufacturing Technology Show (SIMTOS) Biennial (May 23-27, 2022).
• Intermold Korea (March 2022).
• Automation World 2022 and Smart Factory (March 2021).
• Korea PACK 2021 (June 14-17, 2022).
• Korea Metal Week (September 21-23, 2022).
• Tool Tech (October 18-21, 2022).
• Korea Heavy Equipment Show and Sale for Parts and Attachment (August 31-September, 2022).
• Digital Transformation Fair (DTon: October 18-21, 2022).
• International High-Tech Materials & Application Technology Expo (October 26-28, 2022).

Key Contacts

• National Institute of Standards and Technology.
• Korea Machine Tool Manufacturers’ Association.
• Korea Industrial Technology Association.
• Korea Association of Machinery Industry.
• Korea Smart Manufacturing Office.
• 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 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
office.seoul@trade.gov

https://www.trade.gov/south-korea