TLDR: South Korea is strategically leveraging its strengths in manufacturing and medical robotics to boost its competitiveness in physical AI. Facing challenges like outdated machinery, an aging workforce, and intense competition, the government and industry leaders view physical AI, which integrates AI with robots and automated machines, as a critical solution. Plans include significant investments, development of humanoid robots, and fostering an industry-academia-research consortium to drive innovation and secure a global leadership position in this emerging field.
SEOUL, South Korea – South Korea is embarking on an ambitious national initiative to integrate physical artificial intelligence (AI) into its core industries, particularly manufacturing and robotics, as a strategic imperative to overcome a looming industrial crisis and secure future growth. This move comes as the nation’s manufacturing sector grapples with significant challenges, including outdated equipment, an aging skilled workforce, and fierce competition from countries like China. Prime Minister Kim Min-seok has reportedly described the current situation as ‘a crisis greater than the IMF crisis’ .
Physical AI, defined as AI that integrates with robots or automated machines to perform tasks and control real-world physical environments, is rapidly emerging as a pivotal solution. Jensen Huang, CEO of NVIDIA, a prominent figure in the AI industry, has emphasized the importance of physical AI, stating, ‘Physical AI is the answer’ .
The South Korean government, under President Lee Jae-myung’s administration, has outlined a comprehensive five-year economic blueprint centered on AI, aiming to position the country among the world’s top three AI powerhouses. This plan involves a substantial investment of KRW 100 trillion (approximately US$71.5 billion) over five years, with private firms leading development supported by government policies .
Key initiatives include the development of general-purpose humanoid robots, initially for logistics, with plans to expand their application into manufacturing, construction, and services. The government has identified 15 major projects to spearhead this AI transition, with seven specifically targeting manufacturing strengths such as robotics, automobiles, shipbuilding, home appliances, drones, factories, and semiconductors .
Legislative support is also bolstering these efforts. National Assembly members Chung Dong-young and Choi Hyung-doo, recognized as ‘Physical AI evangelists,’ were instrumental in securing a ‘Physical AI Core Technology PoC (Proof of Concept) Budget’ of 42.6 billion won in the 2025 supplementary budget plan. Representative Chung highlighted the opportunity, stating, ‘There are no leading nations in physical AI yet; manufacturing powerhouse Korea must take the lead.’ Representative Choi added that ‘AI transformation (AX) in factories is vital not only for Gyeongnam but also for the future of Korea’s young people’ .
Industry and academia are actively collaborating. On July 30, the Ministry of Science and ICT hosted a meeting to discuss strategies for securing core technology competitiveness and accelerating industry expansion. Vice Minister Ryu Je-myung acknowledged the urgency, noting, ‘I feel a sense of crisis that physical AI is not a story of the future but that we have already reached an evolutionary stage that requires immediate action.’ He emphasized the need for ‘collective intelligence’ as the nation has only taken the ‘first step’ despite securing initial budgets .
Experts underscore the unique challenges and opportunities. Yoo Tae-jun, CEO of MAUM.AI and Chairman of the Korea Physical AI Association, pointed out that ‘The training data for physical AI is difficult to obtain and costly to collect compared to large language models (LLMs) or vision AI, as it serves as the foundation for robots to learn and perform tasks in the real world.’ He stressed that ‘Securing data sovereignty in the field of physical AI is a matter of survival, not an option’ . Professor Jang Young-jae from KAIST views physical AI as ‘a new alternative for the domestic manufacturing industry’ .
Furthermore, the innovation strategy extends to materials, parts, and equipment, aiming to leverage physics-based AI models for developing new materials and components, drawing parallels to Google’s DeepMind’s AlphaFold in drug development. The Korea University of Gyeongnam’s Global Center for Co-Manufacturing AI is actively pursuing this goal .
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To cultivate the necessary talent, the government plans to reform education and workforce systems under an initiative dubbed ‘AI as the Korean alphabet,’ aiming for widespread AI literacy. It also intends to attract top-tier global talent through competitive salaries and military service exemptions, alongside recruiting 2,000 distinguished overseas researchers . This concerted national effort underscores Korea’s determination to transform its industrial landscape and emerge as a global leader in physical AI.
