Migration to smart or automated factory has accelerated in South Korea as companies big and small and foreign are racing to make the transformation while the government incentive is being offered.

Last week, the Ministry of SMEs and Startups announced that it will support upscaling in 1,000 factories powered by 5G and artificial intelligence technologies.

A smart factory goes beyond automation as it utilizes produced manufacturing data via platform

An increase in the number of smart factories is expected to bring in innovation to industries across the board - not only software and hardware industries that deal with robotics, automation equipment, and sensor technologies but also manufacturing execution system (MES) industries, as well as 5G and cloud service sectors.

System integration operators under Korea’s large conglomerates that generally focus on providing smart factory solutions to their family companies are expanding their services to outside customers.

Samsung SDS Co that offers Nexplant AI-based manufacturing platform to Samsung Electronics Co. and other affiliates was assigned to set up a smart plant for the country’s top instant coffee maker Dongsuh Foods Corp. through Miracom Inc. Co. that it acquired in 2011. Posco ICT and CJ OliveNetworks also provide factory solutions to small- and mid-size companies through the credence they built through in-house service.

Wireless companies joined the bandwagon.

SK Telecom has established a 5G smart factory alliance with Samsung Electronics and Siemens. The company, through its holding entity SK Holdings, also owns a 13.8 percent stake in THiRA-UTECH Co., a provider of integrated smart factory solution. Another mobile carrier KT Corp. has directly invested 50 billion won ($42.1 million) in Hyundai Robotics Co., a robot manufacturing unit under Hyundai Heavy Industries Group, and has formed partnership with smart factory solutions provider Telstar-Hommel.

Foreign companies like Germany’s Siemens and France’s Schneider Electric also are staying abreast of times.

On July 15, Schneider Electric opened a trial factory in Iksan, North Jeolla Province, in Korea and is offering small- and mid-size local firms to experience its technology. LS Electric, a smart factory builder under LS Group, has also decided to carry out research and development in AI and cloud sectors with Microsoft Korea to expand its presence in the market.

Startups and small- and mid-size enterprises offering smart factory services are also expected to see a boon in their business as the Korean government plans to level up 18 technologies including robotics, cloud, and sensor among 24 smart manufacturing technologies through R&D projects. It hopes more local smart manufacturing service providing SMEs can follow suit of Sualab, a Korean machine vision solution provider that was acquired by a foreign company for 230 billion won six years after its inception.

The Korean government has been providing direct support to small- and mid-size companies to establish smart factories by injecting 400 billion won in funds every year. The SMEs ministry recently decided to offer 500 million won to companies returning home from overseas sites and establishing robot manufacturing facilities through its third extra budget plan.

Kim Ki-hong, chief executive of Gaon Partners, a leading smart factory-related consulting firm, said that it is most important for smart factories to establish a customized system for each industry through various suppliers in recognition (sensor), judgment (AI), and execution (robot) areas. He noted that sufficient preparation is necessary, or else, companies will not be able to benefit fully from smart factory system.

By Lee Duk-joo and Lee Eun-joo

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