Amid intensifying offensives by China in the fields of artificial intelligence (AI) and supply chains amid its technological competition with the United States, a suggestion has been made that South Korea must also devise strategies to enhance the irreplaceability of its manufacturing sector.

The Korea Institute for Industrial Economics and Trade (KIET) made the assertion in a report titled "U.S.-China Competition 2.0, Changes in China's AI and Supply Chain Strategies and Our Response: Strategic Cultivation and Utilization of K-Manufacturing Irreplaceability" released today (August 2).

The report analyzed that the U.S.-China hegemony competition has moved past the tariff war phase and entered a stage where both countries vie for leadership in AI standards and control over the global production order based on manufacturing.

A notable change is that U.S. export controls on semiconductors to China have accelerated the self-reliance of China's semiconductor and AI ecosystems.

According to the report, China is building a self-reliant semiconductor ecosystem through the internalization of an ecosystem that combines Huawei's proprietary architecture, the localization of materials, parts, equipment, and memory, and domestic chips, software, and AI models.

Following DeepSeek, Chinese open-source AI models are being successively unveiled, and China's market share in 12-inch wafers is projected to expand from 3% in 2020 to 32% in 2026.

ChangXin Memory Technologies (CXMT) has emerged as the world's fourth-largest DRAM manufacturer.

Furthermore, China, which encompasses all industrial sectors under the United Nations industrial classification, is upgrading traditional manufacturing with AI and turning it into a strategic asset.

In the field of physical AI as well, China holds an overwhelming dominance, accounting for over 88% of global humanoid robot shipments last year.

The report projected that China will deploy operational AI on a large scale to manufacturing and logistics sites to preempt work standards centered around itself and further pursue leadership in global standards.

The report suggested that in this situation, South Korea must also shift its paradigm to redesign the sovereign status of its manufacturing sector.

It explained that South Korea must build a Korean-style manufacturing large language model (LLM) utilizing tacit knowledge (knowledge accumulated through experience and learning) and data in fields such as semiconductors, steel, and shipbuilding that only South Korea possesses, and combine this with existing manufacturing strengths to complete a 'K-Manufacturing Architecture' that will lead the global value chain.

It also proposed achieving the 'advancement of the K-materials and parts industry' by turning manufacturing data from traditional materials industries such as steel, petrochemicals, and textiles into assets and preempting new demand chains for ultra-high-value-added materials and parts.

Cho Eun-kyo, a senior research fellow at KIET, said, "Using these irreplaceable assets cultivated as a medium, we need to establish a new trade strategy linked with supply chain cooperation and market entry strategies, and upgrade strategic partnerships so that South Korea can participate beyond a mere parts supplier as a co-designer of the global AI technology ecosystem."


(Photo: Yonhap News)