2026 Manufacturing AI Transformation (M.AX) Policy Guide: How SMEs Can Leverage KRW 423B Government Support

Key Changes in the 2026 Manufacturing AI Transformation (AX) Policy

In 2026, South Korea's manufacturing AI transformation has entered a decisive new phase. Three government ministries — the Ministry of SMEs and Startups (MSS), the Ministry of Science and ICT (MSIT), and the Ministry of Trade, Industry and Energy (MOTIE) — have jointly allocated a combined KRW 423 billion for Manufacturing AI Transformation (M.AX) programs, representing an 84% increase over the previous year.

This unprecedented budget expansion reflects the government's strong commitment to securing global manufacturing competitiveness. MOTIE's M.AX program, in particular, has set ambitious targets: 12,000 smart factories and 500 AI-specialized manufacturers by 2030, providing comprehensive support for SMEs pursuing digital transformation.

Ministry-by-Ministry Program Comparison

MSS: ICT-Integrated Smart Factory Expansion

2026 budget of KRW 436.5 billion (including smart factory deployment programs)

Expanded support for multi-AI agent technology in process automation

Tiered support from basic to advanced levels for practical on-site digital transformation

New initiative for cloud-based SaaS MES solution development and deployment

MOTIE: Factory AI Agent Development and Demonstration

AI agent deployment in core processes: production planning, SCM, and inventory management

Manufacturing data standardization and industry-specific AI model development

Expansion of large enterprise–SME collaborative smart factory models

MSIT: AI Technology R&D and Data Infrastructure

Open calls for manufacturing-specific AI core technology R&D projects

Infrastructure development for industrial data collection, processing, and utilization

Construction and public release of AI training datasets for manufacturing

Specific Programs Available to SMEs

1. Government-Supported Smart Factory Construction

Funding: Up to KRW 200 million (government covers 30–100% of total project cost)

Eligibility: Manufacturing SMEs meeting business history and revenue criteria

Tiered support across basic, advanced level 1, and advanced level 2

Covers AI, IoT, and big data technology adoption costs

2. Cloud Comprehensive Solution Support

Standalone: Up to KRW 250 million (single SaaS MES solution development)

Integrated: Up to KRW 800 million (ERP·MES·SCM integrated cloud platform)

Reduces initial investment through cloud migration while ensuring scalable infrastructure

3. R&D Commercialization Smart Factories

Demonstration and application of government-funded R&D technologies in manufacturing

Matching support between research institutes/universities and SMEs

4. Large–Small Enterprise Collaborative Smart Factories

Large corporations jointly build smart factories for their tier-2 and tier-3 suppliers

Combined matching funds from large enterprises and government grants minimize SME cost burden

Application Strategies to Maximize Selection Chances

Complete a Smart Factory Level Assessment First

Obtaining an official Smart Factory Level Assessment (from the Smart Manufacturing Innovation Promotion Group) before applying allows you to clearly present your current level versus target level, giving you an edge in evaluations. A phased transformation plan aligned with your actual level scores higher than an overly ambitious jump.

Develop a Digital and AI Transformation Roadmap

Current state analysis: Assess production processes, data collection systems, and IT infrastructure

Goal setting: Create a 3–5 year AI adoption roadmap (simple automation → data-driven decision-making → AI-autonomous operations)

KPI definition: Present quantitative targets such as defect rate reduction, productivity improvement, and energy savings

Register in the Supplier Pool and Form Consortiums

Forming a consortium with verified suppliers is a key scoring factor in feasibility evaluations. Review the registered supplier list from the Smart Manufacturing Innovation Promotion Group in advance and establish preliminary agreements with companies that have strong industry-specific references.

Why Professional Consulting Matters

With multiple programs running simultaneously across three ministries, identifying the optimal program for your company is the most critical step. The best-fit program varies by industry, company size, and technology readiness, and overlapping application restrictions must be carefully reviewed.

Business plan preparation also demands a strategic approach — covering the necessity of technology adoption, quantitative evidence of expected outcomes, and post-implementation management plans in a format that resonates with evaluation committees.

KITIM (Korea Institute of Technology Innovation Management) leverages extensive consulting experience in smart factories and manufacturing AI transformation to provide end-to-end support — from optimal program matching and business plan preparation to evaluation response. If you are considering applying for 2026 M.AX programs, reach out through [KITIM Contact](/contact) for a complimentary preliminary consultation.