South Korea Bets $17.8B on AI to Win Manufacturing War, Save Jobs

The Middle East war may seem like a more imminent threat as it is being directly witnessed, but winning the AI war is much more important for South Korea as it may very well determine the future of the country, Kim Jung-kwan, minister of trade, industry and resources, said in a recent exclusive interview with Yonhap News Agency.

"We can withstand the Middle East war through diversification (of trade routes and supply chains), but if we lose the AI war, we will see jobs for the future generation disappear and our manufacturing competitiveness fade away," Kim said.

Earlier this month, South Korea's National Assembly passed a 26.2 trillion-won (US$17.8 billion) extra budget for war response, with most of the budget mainly earmarked for efforts to cope with the economic fallout from the war between the United States and Iran.

What drew attention was the 83 billion won the industry ministry has set aside from the extra budget for what it calls the "Manufacturing AI Transformation (M.AX)" initiative, which, according to Kim, may, at first, seem unrelated to the Middle East crisis.

"Look at how the U.S., once the manufacturing kingdom, lost its competitiveness just over one to two generations as the manufacturing expertise of the older generation was not passed on to the younger generation," he said.

"South Korea is in a similar situation. Most of the workers in manufacturing industries are in their 50s or 60s," he added, emphasising that the country has to protect its global leadership in the sector, and that successful AI transformation of the currently labor-intensive sector may be the right, if not the only, way to do so.

The minister noted that many fear robots may take people's jobs following a successful AI transformation of the manufacturing sector, but argued there will be no jobs left at all if businesses fail to maintain their competitiveness.

But with more AI factories and industrial robots, young workers who used to do welding or casting jobs will become robot managers, which will make the manufacturing industry not a "dirty, dangerous and difficult" industry, but an industry with a competitive "edge," Kim argued.

He also insisted that the M.AX initiative, if successfully implemented, will enhance South Korea's overall competitiveness against its manufacturing rivals, such as China, the U.S. and Japan, adding AI advancement is the only way Seoul can have superiority in terms of industrial productivity against major economies with more manpower and capital.

To this end, Seoul has launched the so-called M.AX Alliance with major local companies, including Samsung Electronics Co., Hyundai Motor Co., and leading AI firms to foster AI transformation of manufacturing industries.

The alliance aims to begin mass production of humanoid robots in 2029 and construct 500 AI factories by 2030.

In the case of crude oil, the country has mainly imported Middle Eastern crude through the Strait of Hormuz, but as the recent crisis shows, Seoul should diversify its import portfolio, he added, noting that it will inevitably have to expand imports from the U.S.

South Korea should also focus more on internalising supply chains of critical minerals and industrial resources by more actively participating in overseas resources development projects, he said.

- IANS