(Yonhap Interview) AI transformation of manufacturing industry key to survival in global AI race: minister | Yonhap News Agency

SEOUL, April 19 (Yonhap) -- The world is experiencing two different wars at the moment, Seoul's industry minister said: the Middle East war and the artificial intelligence (AI) war.

The Middle East war may seem like a more imminent threat as it is being directly witnessed, but winning the AI war is much more important for South Korea as it may very well determine the future of the country, Kim Jung-kwan, minister of trade, industry and resources, said in a recent exclusive interview with Yonhap News Agency.

"We can withstand the Middle East war through diversification (of trade routes and supply chains), but if we lose the AI war, we will see jobs for the future generation disappear and our manufacturing competitiveness fade away," Kim said.

Industry Minister Kim Jung-kwan speaks during an exclusive interview with Yonhap News Agency held at the government complex in Seoul on April 16, 2026. (Yonhap)

Earlier this month, South Korea's National Assembly passed a 26.2 trillion-won (US$17.8 billion) extra budget for war response, with most of the budget mainly earmarked for efforts to cope with the economic fallout from the war between the United States and Iran.

What drew attention was the 83 billion won the industry ministry has set aside from the extra budget for what it calls the "Manufacturing AI Transformation (M.AX)" initiative, which, according to Kim, may, at first, seem unrelated to the Middle East crisis.

"Look at how the U.S., once the manufacturing kingdom, lost its competitiveness just over one to two generations as the manufacturing expertise of the older generation was not passed on to the younger generation," he said.

"South Korea is in a similar situation. Most of the workers in manufacturing industries are in their 50s or 60s," he added, emphasizing that the country has to protect its global leadership in the sector, and that successful AI transformation of the currently labor-intensive sector may be the right, if not the only, way to do so.

The minister noted that many fear robots may take people's jobs following a successful AI transformation of the manufacturing sector, but argued there will be no jobs left at all if businesses fail to maintain their competitiveness.

But with more AI factories and industrial robots, young workers who used to do welding or casting jobs will become robot managers, which will make the manufacturing industry not a "dirty, dangerous and difficult" industry, but an industry with a competitive "edge," Kim argued.

He also insisted that the M.AX initiative, if successfully implemented, will enhance South Korea's overall competitiveness against its manufacturing rivals, such as China, the U.S. and Japan, adding AI advancement is the only way Seoul can have superiority in terms of industrial productivity against major economies with more manpower and capital.

To this end, Seoul has launched the so-called M.AX Alliance with major local companies, including Samsung Electronics Co., Hyundai Motor Co., and leading AI firms to foster AI transformation of manufacturing industries.

The alliance aims to begin mass production of humanoid robots in 2029 and construct 500 AI factories by 2030.

In this file photo, Atlas, a humanoid robot model developed by Hyundai Motor Co., demonstrates its parts handling movement during the CES tech show, held in Las Vegas on Jan. 7, 2026. (Yonhap)

With regard to the ongoing conflict in the Middle East, the minister said the lesson for South Korea, especially with its high dependence on imports for energy, is that it must diversify both its trading partners and trade routes.

In the case of crude oil, the country has mainly imported Middle Eastern crude through the Strait of Hormuz, but as the recent crisis shows, Seoul should diversify its import portfolio, he added, noting that it will inevitably have to expand imports from the U.S.

"The reason we have failed to diversify crude imports is because we used to approach the issue from an economic perspective, but now, we must understand the issue from an energy security perspective," he explained, vowing the government's continued diversification efforts even after the war ends.

South Korea should also focus more on internalizing supply chains of critical minerals and industrial resources by more actively participating in overseas resources development projects, he said.

Kim said South Korea has secured alternative crude supplies for April and May, and that naphtha supplies will begin to stabilize after this month.

The country recently secured a combined 273 million barrels of crude oil and 2.1 million tons of naphtha, an industrial feedstock, from Oman, Saudi Arabia, Qatar and Kazakhstan, according to Seoul officials. The supplies are sufficient to sustain the country's crude consumption for three months and naphtha for one month.

Cars are lined up at a gas station in the southeastern port city of Busan on April 10, 2026. (Yonhap)

Regarding South Korea's envisioned investment in the U.S. under the countries' tariff agreement, the industry minister said the two sides are continuing consultations on potential projects, noting the projects will likely be related to sectors where both countries can benefit, such as energy and shipbuilding.

"The U.S. knows South Korea's sincerity on this issue ... and with the actual establishment of a strategic investment corporation in June to support Seoul's investment in the U.S., the two sides will be able to further develop mutual trust," he said.

In March, the National Assembly passed a special bill on Seoul's $350 billion investment pledge to the U.S., under which South Korea will set up a new state-run corporation to implement the investment package.

To speed up the investment process, the Seoul government has also launched a separate committee to conduct a preliminary review of potential projects.

South Korea's Industry Minister Kim Jung-kwan (R) and U.S. Commerce Secretary Howard Lutnick pose ahead of talks on renewed trade tensions between the two countries at the Department of Commerce in Washington, D.C., on Jan. 29, 2026, in this file photo provided by the South Korean ministry. (PHOTO NOT FOR SALE) (Yonhap)

nyway@yna.co.kr

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