South Gyeongsang launches public-private body to drive AI transformation in manufacturing

South Gyeongsang Province is stepping up its push to transform the region's manufacturing sector through physical AI, launching a formal public-private governance framework to accelerate AI-driven industrial conversion.

The province held the inaugural ceremony of the "South Gyeongnam Smart Manufacturing AX Public-Private Council" on Tuesday at Hotel International in Changwon, with about 60 officials from the central government, local authorities and related agencies in attendance. The council is designed to put into practice the physical AI transformation initiative — a flagship industrial policy of Governor Park Wan-su's ninth elected-term administration.

The ceremony featured a briefing on the 2026 smart factory construction support program, presentations of outstanding AI-conversion cases in manufacturing, and a keynote lecture on AI-based manufacturing innovation and physical AI technology.

The province's focus on spreading AI conversion in manufacturing reflects the tangible results smart factories have delivered for small and midsize manufacturers in the region. According to findings from a recent performance review of the province's smart manufacturing AX support program, companies that adopted smart factories recorded a 44.3 percent improvement in quality, a 22.8 percent gain in productivity and a 17.0 percent reduction in delivery times.

To extend those gains across the province, South Gyeongsang is channeling a total project budget of 93.5 billion won ($63.9 million) — including 43 billion won in national government funding — into building 281 new smart manufacturing AX factories this year.

The public-private council will bring together manufacturing companies, smart manufacturing suppliers and related agencies to build a full-cycle AI-conversion ecosystem covering demand identification, technology matching, AI demonstration, commercialization and post-implementation management. Its key tasks include strengthening the capabilities of manufacturing firms, activating industry networks, providing smart manufacturing technology education, supporting AI technology demonstration and planning new projects.

This year in particular, the province will link a range of initiatives — including preliminary planning for software and AI convergence technology demonstrations at manufacturing firms, the South Gyeongnam-style smart factory construction support program, industry-specific demand-and-supply company meetup days, and core smart manufacturing technology training. The aim is to broaden AI adoption among local manufacturers and sharpen the competitiveness of smart manufacturing suppliers.

Physical AI refers to technology that enables manufacturing equipment and robots to perceive, judge and carry out tasks autonomously. South Gyeongsang plans to extend a physical AI-based autonomous manufacturing system — in which AI analyzes production-floor data in real time to optimize processes and predict equipment failures — across its key industries.

"We will strengthen cooperation among manufacturing companies, AI firms and related agencies through the Smart Manufacturing AX Public-Private Council, so that physical AI can spread rapidly to factory floors and translate into genuine manufacturing innovation," said Park Hwan, director of the province's AI Industry Division.

Meanwhile, South Gyeongsang is also pursuing a region-led AI transformation initiative and the development of an AI-conversion demonstration industrial complex. In September, the province plans to open the "Gyeongnam Manufacturing AI Data Center" in partnership with the Ministry of SMEs and Startups and the Korea SMEs and Startups Agency, establishing a one-stop physical AI support platform for the region.