Korea's National Growth Fund to channel about 16 trillion won into physical AI push this year

South Korea's National Growth Fund will channel about 16 trillion won ($10.4 billion) into physical AI-related sectors this year as part of the government's "Three Mega Projects for a Great Leap Forward," aiming to make the country a global leader in physical artificial intelligence. The government plans to identify promising companies and mega-projects in the physical AI space and provide long-term, large-scale financial support.

The Financial Services Commission and the Ministry of Trade, Industry and Energy held a joint public-private roundtable Tuesday at Korea Development Bank in Yeouido, Seoul, and announced the "National Growth Fund — M.AX (Manufacturing AI Transformation) Frontier Project" initiative.

The M.AX Frontier Project is designed to identify and nurture companies capable of leading the global physical AI market by building on South Korea's manufacturing strengths. The Ministry of Trade, Industry and Energy will support manufacturers' AI transformation and technological innovation through the M.AX Alliance, while the Financial Services Commission will back large-scale investment and scale-up by promising companies through the National Growth Fund.

The roundtable served as a first step, gathering input on investment demand from industry and discussing ways to collaborate in identifying large-scale projects in key physical AI sectors such as AI factories, robotics and future mobility.

The ministry will take the lead in spreading AI adoption across manufacturing sites and building the necessary technological foundation. To overcome pressing challenges including a demographic cliff and declining productivity, it is building the M.AX Alliance — a network of more than 1,500 industry, academic and research participants — to drive AI adoption across the manufacturing sector.

Going forward, the ministry plans to push M.AX policies centered on three core pillars — AI factories, AI robotics and AI semiconductors — pursuing large-scale R&D and demonstration projects to rapidly apply and spread AI transformation across manufacturing.

The Financial Services Commission will provide funding to help companies expand onto the global stage. Working in tandem with the ministry's M.AX Alliance, it will jointly identify promising companies and mega-projects in key physical AI markets — including AI factories, robotics, future mobility and defense — and supply long-term patient capital to support their growth and scale-up.

The Financial Services Commission plans to deploy about 16 trillion won through the National Growth Fund this year across six sectors closely tied to physical AI: AI, robotics, future mobility, defense, semiconductors and secondary batteries.

The roundtable brought together major companies from three sectors — AI factories (LS Cable & System, CJ Logistics, Isupetasys and Daesung Hi-Tech), robotics (Doosan Robotics and Wonik Robotics) and future mobility (Hyundai Mobis, LX Semicon and MagnaChip Semiconductor) — to share their growth strategies.

LS Cable & System, which is pursuing the expansion of an ultra-high-voltage submarine cable production factory — the first M.AX investment project under the National Growth Fund — outlined its vision to lead the global submarine cable market through AI factory-based manufacturing innovation. The company is participating in the M.AX Alliance to introduce AI into production and quality inspection processes for ultra-long, heavy-weight submarine cables. The National Growth Fund will provide 80 billion won in low-interest loans to support the expansion of related test-bed facilities.

Participating companies agreed that long-term patient capital for large-scale facility investment, demonstration infrastructure and global expansion is essential to leading the AI era — going well beyond research and development support alone.

Shin Young-seok, an analyst at Morgan Stanley, told the gathering that "South Korea's accumulated manufacturing capabilities and its rapid industrial transformation capacity are the core foundation for seizing new growth opportunities in the physical AI era."

The Financial Services Commission and the ministry plan to closely align industrial promotion and financial policies to support companies throughout their entire growth cycle, from technology development and demonstration through commercialization and scale-up.

FSC Chairman Lee Eok-won pledged that "physical AI, which will be realized on the manufacturing floor, is a field that will contribute greatly to productivity gains and the creation of new growth engines," adding that the National Growth Fund would serve as "a powerful implementation tool to turn the vision of becoming the world's top physical AI nation into reality, acting as a catalyst to spur private investment."

Ministry of Trade, Industry and Energy Minister Kim Jung-kwan said "AI factories, AI robotics and AI semiconductors are the core drivers of our growth in the coming AI era, and bold investment is needed," adding that "investment in M.AX infrastructure is not an easy decision even for large conglomerates, so I hope the National Growth Fund can serve as a reliable ladder for growth."