ULSAN — Ulsan, South Korea's largest manufacturing city, is accelerating a push it calls manufacturing AI transformation, or M.AX, which combines artificial intelligence with its core industries of automobiles, shipbuilding and petrochemicals. The plan is to pair the vast troves of data accumulated in factories with AI to build a production system that optimizes processes on its own and predicts equipment failures before they occur. The goal is to expand testing that began in petrochemicals into autos and shipbuilding, turning Ulsan into both a proving ground and a commercialization hub for manufacturing AI technology.
The city is broadening industry-specific manufacturing AI demonstration projects in line with the central government's policies to foster physical AI and humanoid robots, Ulsan said on the 17th. The focus is on standardizing process data from existing manufacturing operations and applying AI technologies such as autonomous control and predictive diagnostics to actual production floors to raise productivity and operational efficiency.
Petrochemicals is moving fastest. From September last year through December 2028, Ulsan is investing a total of 29 billion won ($20.9 million) in a project to build an AX demonstration industrial complex for petroleum and chemicals. Using data obtained from representative plants, the city will develop a vertical AI model tailored to petrochemical processes and establish AX pilot plants along with demonstration infrastructure.
Work is under way on the ground to apply technologies including integration of production and equipment data, digital twins, process optimization and predictive equipment diagnostics to actual production lines. The Ulsan Information & Industry Promotion Agency and the Ulsan Plant Managers Council also recently held a technology exchange meeting to widen the cooperation network between AI specialist firms and manufacturers. Technologies verified in Ulsan will be spread to 10 hub industrial complexes nationwide, including Changwon, Banwol-Sihwa and Yeosu, through the MINI Alliance under the industrial complex AX subcommittee of the Ministry of Trade, Industry and Energy.
The scope of manufacturing AI is widening to autos and shipbuilding. In the auto sector, Ulsan is working with Gwangju on a support project for humanoid-based manufacturing AI transformation in the automotive industry. It is a mega-regional cooperation project that will apply and verify humanoid robots and manufacturing AI on actual production lines, drawing on the finished-vehicle production base of Hyundai Motor and Kia.
In shipbuilding, the city is expanding the testing base for smart vessels and core equipment. Ulsan allocated 2.92 billion won in this year's supplementary budget for support of an AI vessel-specialized base and advanced parts demonstration, and 1.5 billion won for building a digital training base for core shipbuilding talent. The government's 2027 budget proposal also includes a project to build a demonstration support center for AI vessel equipment and advanced parts, which will expand testing and certification capacity for smart and eco-friendly ship components.
The city is also preparing for changes in industry and the labor market that the technology will bring. Centered on an industrial AX council launched in July, it will identify strategic tasks needed on manufacturing floors and draw up a comprehensive labor transition plan that analyzes shifts in jobs stemming from industrial restructuring. Policy weight is also being placed on building a foundation that lets not only large companies but also local small and mid-sized firms take part in the AI transition.
Government funding is backing the effort. State funds for Ulsan reflected in the 2027 government budget proposal total 3.02 trillion won, up 303 billion won, or 11.1%, from a year earlier and topping 3 trillion won for the first time. The total includes projects that will support the AI transition of manufacturing, such as the Ulsan-Gwangju automotive M.AX project, research support for hyperscale industrial AI, and the petrochemical AX demonstration industrial complex.
To complete its manufacturing AI ecosystem, Ulsan is also pressing its case in the government's second round of relocating public institutions. The city aims to attract industrial AX-related organizations including the Korea Data Agency, the Korea Institute for Advancement of Technology and the Software Policy & Research Institute, and link them with local manufacturers and research institutes. It is also seeking to bring in the head office of Industrial Bank of Korea to strengthen policy financing needed for AX equipment investment by smaller companies.
Ulsan's strength is the large-scale industrial data accumulated on the production floors of its auto, shipbuilding and petrochemical plants. The plan is to combine that with a hyperscale AI data center now under construction and with research and demonstration institutions to build a manufacturing AI ecosystem that runs from technology development through on-site testing to commercialization, all within the region.
"We will combine the world-class manufacturing base Ulsan has built up with cutting-edge AI, energy and policy financing," Mayor Kim Sang-wook said. "We will establish ourselves as the national demonstration hub for manufacturing AI that leads South Korea's industrial transformation."
