S.Korea to expand "smart factories" to 10,000 with 1 bln USD assistance

South Korea planned to expand the so-called "smart factories," or intellectualized and automated production lines, to 10,000 by 2020 with 1 trillion won (about 1 billion U.S. dollars) in financial support, the commerce ministry said Thursday.

The Ministry of Trade, Industry and Energy unveiled the "3.0 strategy for manufacturing innovation," which aimed at intellectualizing production lines and eventually creating innovative products with convergence in technologies of information, communications and software as well as the Internet of Things (IoT).

The IoT refers to a technology or an environment, under which all objects are connected via the Internet to exchange real-time information and data in everything from home appliances to factories.

Under the 3.0 strategy, some 1 trillion won will be spent to increase the smart factories to about 10,000 by 2020. The private sector will pay 700 billion won, and the remaining 300 billion won will be paid by fiscal funds.

Nurturing industries to replace imported products was the 1.0 strategy, and the fast-follower strategy was the 2.0 scheme. The 3. 0 strategy, or the first-mover strategy, aimed to boost global leading companies such as Apple and Google.

"Large corporations in South Korea mainly focus on assembling parts and components along with designing and creating new products. Unless small firms, mostly parts makers, are intellectualized in production lines, innovation cannot be achieved in the manufacturing industry," said Lee Kwan-seop, director-general of the ministry's industry policy bureau.

Lee said recognition spread since the 2008 global financial crisis that manufacturing powerhouses can overcome crises, noting that paradigm shifts emerged in the global manufacturing sector as seen in Google's development of driverless cars and Facebook's acquisition of drone manufacturers.

Boundaries between industries have crumbled down and various fusion between industries grew, Lee said, noting that South Korea needs to contemplate how to upgrade its manufacturing industry.