SME Groups Propose Cooperative-Led AI Transition

The Korea Federation of SMEs and the Ministry of Finance held a policy forum, “Innovation Strategies for SMEs in the Physical AI Era,” at the Lotte Hotel Jeju on October 21. More than 200 experts and small-business representatives called for cooperative-led shared infrastructure and systems for using manufacturing data to help small manufacturers adopt AI. The approach is intended to reduce adoption costs and failure risks that are difficult for individual companies to bear, while spreading technologies validated in each industry. Participants also identified converting shop-floor skills and know-how into data assets usable by AI as a key task.

In a keynote address, Park Young-sun, a member of the Ministry of Finance’s Strategic Economic Advisory Group, said companies would each have two factories: an existing manufacturing plant and a factory for building AI. She said SMEs should develop industry-specific AI through cooperatives and proposed a “K-ontology” connecting national and industrial data. An ontology is a way to connect data so AI can understand its meaning and relationships. Park said cooperatives should gather member data to build a foundation for physical AI and establish systems to turn data into assets and compensate companies that provide it. She also asked the government to fund research and development for cooperative-led AI development.

Kim Jun-ha, dean of the AI Policy and Strategy Graduate School at the Gwangju Institute of Science and Technology, said production-process data and workers’ expertise are key competitive assets in the physical AI era and should be made usable by AI, rather than merely collected. Under the proposed division of responsibilities, companies would accumulate data, cooperatives would set shared industry standards and provide testing grounds, and the government would support infrastructure. Han Byung-jun, chair of the Korea Information Industry Cooperative, said SME AI transformation begins when business leaders identify problems on the shop floor and emphasized shared infrastructure. Cho Joo-hyun, president of the Korea Small Business Institute, proposed a shared-innovation model that lets companies use common foundations while protecting each company’s competitiveness.

Participants called for greater SME access to government research and development and demonstration projects, as well as support for long-term technology testing in operating factories. Jang Yong-hwan, chair of the Gyeongin Foundry Industrial Complex Business Cooperative, said small companies in foundational industries have extensive manufacturing data and shop-floor challenges but lack AI staff and investment capacity. Oh Min-seok, a vice president at Megazone, proposed regional and industry-based shared infrastructure covering data preparation, deployment on factory floors, and maintenance. Jang Young-jae, head of the Manufacturing Physical AI Research Center at the Korea Advanced Institute of Science and Technology, proposed a “Factory Manager AI for Everyone” model to spread industry-specific models validated through small-scale trials.

In a video message, Vice Minister of Finance Kwon Dae-young said the government would preserve skilled workers’ know-how as data and distribute industry-specific AI models to factory floors. The government said it would pursue physical AI trials at more than 500 sites every year and help spread results from early-adopting factories to nearby companies. Kwon said the government would support 8 million SMEs so they become leaders rather than followers in the AI era. Korea Federation of SMEs Chair Kim Ki-mun presented Park with a policy proposal titled “SMEs’ AI Transformation: Voices from the Field and Policy Tasks” and called for phased support tailored to company size and broader adoption through industry cooperatives.

The Korea Federation of SMEs and the Ministry of Finance held a policy forum, “Innovation Strategies for SMEs in the Physical AI Era,” at the Lotte Hotel Jeju on October 21. More than 200 experts and small-business representatives called for cooperative-led shared infrastructure and systems for using manufacturing data to help small manufacturers adopt AI. The approach is intended to reduce adoption costs and failure risks that are difficult for individual companies to bear, while spreading technologies validated in each industry. Participants also identified converting shop-floor skills and know-how into data assets usable by AI as a key task.

In a keynote address, Park Young-sun, a member of the Ministry of Finance’s Strategic Economic Advisory Group, said companies would each have two factories: an existing manufacturing plant and a factory for building AI. She said SMEs should develop industry-specific AI through cooperatives and proposed a “K-ontology” connecting national and industrial data. An ontology is a way to connect data so AI can understand its meaning and relationships. Park said cooperatives should gather member data to build a foundation for physical AI and establish systems to turn data into assets and compensate companies that provide it. She also asked the government to fund research and development for cooperative-led AI development.

Kim Jun-ha, dean of the AI Policy and Strategy Graduate School at the Gwangju Institute of Science and Technology, said production-process data and workers’ expertise are key competitive assets in the physical AI era and should be made usable by AI, rather than merely collected. Under the proposed division of responsibilities, companies would accumulate data, cooperatives would set shared industry standards and provide testing grounds, and the government would support infrastructure. Han Byung-jun, chair of the Korea Information Industry Cooperative, said SME AI transformation begins when business leaders identify problems on the shop floor and emphasized shared infrastructure. Cho Joo-hyun, president of the Korea Small Business Institute, proposed a shared-innovation model that lets companies use common foundations while protecting each company’s competitiveness.

Participants called for greater SME access to government research and development and demonstration projects, as well as support for long-term technology testing in operating factories. Jang Yong-hwan, chair of the Gyeongin Foundry Industrial Complex Business Cooperative, said small companies in foundational industries have extensive manufacturing data and shop-floor challenges but lack AI staff and investment capacity. Oh Min-seok, a vice president at Megazone, proposed regional and industry-based shared infrastructure covering data preparation, deployment on factory floors, and maintenance. Jang Young-jae, head of the Manufacturing Physical AI Research Center at the Korea Advanced Institute of Science and Technology, proposed a “Factory Manager AI for Everyone” model to spread industry-specific models validated through small-scale trials.

In a video message, Vice Minister of Finance Kwon Dae-young said the government would preserve skilled workers’ know-how as data and distribute industry-specific AI models to factory floors. The government said it would pursue physical AI trials at more than 500 sites every year and help spread results from early-adopting factories to nearby companies. Kwon said the government would support 8 million SMEs so they become leaders rather than followers in the AI era. Korea Federation of SMEs Chair Kim Ki-mun presented Park with a policy proposal titled “SMEs’ AI Transformation: Voices from the Field and Policy Tasks” and called for phased support tailored to company size and broader adoption through industry cooperatives.