South Korea plans $10.3B push for physical AI
· UPIJuly 1 (Asia Today) -- South Korea plans to provide about 16 trillion won, or $10.3 billion, in policy financing this year to accelerate the adoption of physical artificial intelligence across six advanced industries, financial authorities said Wednesday.
The financing will target artificial intelligence, robotics, future vehicles, defense, semiconductors and secondary batteries. Physical AI refers to technology that allows robots, vehicles and factory equipment to perceive their surroundings, make decisions and perform tasks in the physical world.
The Financial Services Commission and the Ministry of Trade, Industry and Resources announced the initiative during a public-private meeting at Korea Development Bank headquarters in Seoul.
Officials met with representatives from manufacturing companies, financial institutions and technology organizations to discuss prospective projects under the National Growth Fund-M.AX Frontier Project.
M.AX stands for Manufacturing AI Transformation. The project combines industrial policy and public financing to help companies apply AI to factories, robots, vehicles and other physical systems.
The ministry will support manufacturing companies' technological development and AI adoption, while the commission will use the National Growth Fund to finance large investments and business expansion. The two agencies said they would coordinate support covering research, testing, commercialization and scale-up.
The first project is an expansion of LS Cable & System's extra-high-voltage subsea cable production facilities and testing infrastructure in Donghae, about 110 miles east of Seoul.
LS Cable & System plans to invest 160 billion won, or about $103 million, in the expansion. The National Growth Fund approved an 80 billion won, or about $51.5 million, low-interest loan with a 10-year term Thursday. The dollar conversions are based on the XE mid-market exchange rate Wednesday.
The project is intended to help the company respond to growing demand for subsea cables used in offshore wind farms and high-capacity transmission networks.
Subsea cables must withstand water pressure and ocean currents while maintaining complete electrical insulation, making them technologically difficult to manufacture.
LS Cable & System is also applying AI models to the production and quality inspection of long-distance, heavy subsea cables as a member of the government's M.AX Alliance.
The government said the broader financing program would provide long-term capital to promising companies in physical AI-related industries.
Financial authorities plan to work with the industry ministry to identify companies and large projects capable of strengthening domestic supply chains and creating growth across related industries.
The M.AX Frontier Project was introduced after the government identified semiconductors, physical AI and AI data centers as three national megaprojects Monday.
The initiative comes as AI expands beyond generative software into equipment that operates directly in factories, logistics centers and transportation systems.
Government officials said South Korea could use its manufacturing infrastructure, production expertise, industrial data and established supply chains to compete in the emerging physical AI market.
Companies participating in Wednesday's meeting included LS Cable & System, CJ Logistics, Isu Petasys, Daesung Hi-Tech, Doosan Robotics, Wonik Robotics, Hyundai Mobis, LX Semicon and Magnachip Semiconductor.
Financial institutions included Korea Development Bank, Industrial Bank of Korea, NongHyup Financial Group, KB Kookmin Bank, Hana Bank, Woori Bank and Morgan Stanley.
Financial Services Commission Chairman Lee Eog-weon said physical AI could raise productivity and produce new sources of economic growth.
"The National Growth Fund will serve as a powerful implementation tool for realizing South Korea's vision of becoming a global physical AI leader," Lee said.
He said the public fund would act as seed capital that encourages additional investment from private financial institutions.
Trade, Industry and Resources Minister Kim Jung-kwan said companies would require large amounts of financing to build AI infrastructure and transform manufacturing facilities.
"Investments in M.AX infrastructure are difficult even for large companies to undertake alone," Kim said. "We hope the National Growth Fund will serve as a dependable growth ladder."
Kim said the ministry would support the expansion of manufacturing AI and work to increase the economic effect of the fund's investments.
-- Reported by Asia Today; translated by UPI
© Asia Today. Unauthorized reproduction or redistribution prohibited.
Original Korean report: https://www.asiatoday.co.kr/kn/view.php?key=20260701010000366