South Korea to boost manufacturing with AI, tackle economic disparities

South Korea's government is set to revolutionize its manufacturing sector by integrating artificial intelligence (AI) into core industries such as steel, petrochemicals, home appliances, shipbuilding, and automobiles. This initiative aims to bolster competitiveness by equipping these key sectors with advanced AI capabilities, moving beyond the current focus on semiconductors.

The government's 'Economic Structure Innovation Promotion Direction' outlines a strategy to enhance fundamental competitiveness through AI-driven manufacturing process innovation and a shift towards high-value products. For the steel industry, specific plans include developing AI-based manufacturing processes and advancing eco-friendly technologies like hydrogen reduction steelmaking and special carbon steel. The initiative also prioritizes the development of "physical AI," focusing on creating foundational components for robots and developing specialized humanoid robots for ten key industries, including chemicals.

Recognizing the risk of widening economic disparities if the current economic momentum, led by semiconductors, does not spread across the entire economy, the government is also focusing on bridging the gap. In the second half of the year, measures will be introduced to alleviate financial and livelihood anxieties for vulnerable populations. A reform of the basic and retirement pension systems is planned for the third quarter to support asset formation across different age groups.

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There are concerns that if the current semiconductor warmth does not spread to the entire economy, the polarization structure of industry, region, income, and assets could deepen.

Furthermore, the government is committed to fostering AI adaptation in the workforce. Specific initiatives for AI transition (AX) tailored for young adults, current employees, and those changing careers will be detailed in the third quarter. A basic law on the rights of workers is also slated for enactment by year-end. The plan includes creating 300,000 jobs through private and public sector expansion and startups by 2030, with detailed plans for youth employment recovery to be announced in the third quarter.

Responding to recent negative assessments of the Korean stock market by Bloomberg, Deputy Prime Minister and Minister of Economy and Finance Koo Yun-cheol asserted that the Korean economy is "more robust than ever" and demonstrating "unprecedented performance." He pledged continued efforts to improve the capital market's structural integrity and foster new industries to make Korea a more reliable investment destination.

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The Korean economy is more robust than ever and demonstrating unprecedented performance.