SME minister calls on small firms to lead manufacturing innovation in AI era

Minister of SMEs and Startups Lee So-young said small and medium-sized enterprises must become the driving force of manufacturing innovation in the age of AI transformation. The ministry said it will strengthen step-by-step support — from digital transformation to the adoption of physical AI — and actively work to cultivate specialized talent in manufacturing AI.

Speaking at the opening ceremony of the 2026 Smart Biz Expo at COEX in Seoul on Tuesday, Lee said the most pressing challenge facing the Korean economy is polarization. "To narrow the gap between large corporations and SMEs, and to ensure the benefits of growth reach the factory floor, large companies must share their capital and manufacturing know-how with smaller firms so we can raise competitiveness together," she said.

The Smart Biz Expo showcases results from a co-prosperity smart factory program jointly supported by the Ministry of SMEs and Startups and Samsung Electronics, while helping SMEs expand their sales channels and facilitating business-to-business exchanges.

Lee said smart factories must now advance beyond production automation. "In this era of AI transformation, manufacturing AI innovation — where AI assists on-site decision-making and fundamentally elevates manufacturing competitiveness — must take things to the next level," she said.

Since introducing its large-SME co-prosperity smart factory policy in 2018, the ministry has partnered with more than 60 large corporations and public enterprises to support the establishment of smart factories at roughly 6,800 SMEs. Participating companies have recorded improvements in productivity and product quality.

This year's Smart Biz Expo runs Tuesday through Friday. Fifty-three companies that took part in the co-prosperity smart factory program are showcasing their products, with a range of programs including purchasing consultations and benchmarking tours.

After touring the expo, Lee visited Difarms Tech, a small manufacturing company in Gunpo, Gyeonggi Province. The firm produces automotive components, semiconductor sockets and camera parts using ultra-precision mold manufacturing technology, and exports its products overseas.

Difarms Tech introduced smart factory systems more than a decade ago, building a platform to monitor production performance in real time and manage molds and equipment. The company has since upgraded its processes so that an AI system — trained by photographing fingernail-sized optical components at 20 to 40 frames per second — now handles product sorting. The improvements have boosted equipment operation rates, and the company is expanding AI technology to other parts of its production line.

The adoption of AI on the factory floor is moving beyond simple production automation, with applications expanding into quality inspection and equipment management. However, for SMEs to apply AI technology to actual production processes, securing specialized talent and providing tailored, step-by-step support matched to each company's level of technological readiness are critical, experts note.

At the factory visit, concerns were raised about the difficulty of securing AI specialists and the need for customized support based on each company's stage of digital transformation.

Lee said the ministry would gather diverse opinions from the field and pursue stronger step-by-step support policies spanning digital transformation through physical AI adoption, as well as the cultivation of core manufacturing AI talent. "I will put in place support policies so that the results of national strategic projects, including physical AI, extend to SMEs and small businesses can establish themselves as proud leading players," she said.