AI (Artificial Intelligence) has become not an option but a necessity. Today, AI is rapidly reshaping traditional industries such as manufacturing and biotech, becoming a crucial key to opening the future. However, many companies are unsure where to begin their “AI Transformation (AX)”, or which methodology to adopt. In Daegu, in order to alleviate these challenges felt on the industrial frontlines, a broader and more detailed support system has been established. Daegu City and Daegu Techno Park have, for several years now, been swiftly preparing for the future through AX processes tailored to regional industries. Here, we examine the ongoing AX initiatives within the region’s industrial sector.
◆ Expanding the AI Industry Ecosystem Through Fostering AI Specialist Companies
Daegu’s first step toward AX goes back three years. Between 2022 and 2023, in collaboration with Daegu Techno Park, the city implemented a project to integrate AI technology into locally specialized sectors—namely transport equipment and mechanical materials/components. Although transport machinery and mechanical parts businesses comprised just 2.5% of businesses in Daegu in 2022, they accounted for 10.7% of employees and 20.5% of revenue. Using a total project budget of 6.75 billion won, the city focused on embedding AI technologies into Daegu's transport and parts industry, primarily among first-tier automotive suppliers.
Eight local automotive parts companies—including Sambo Motors, S-L, KBI Metal, Kyungchang Industry, KBI Wiper System, PHA, Sangshin Brake, and Pyeonghwa Industry—participated as demand-side firms. AI specialist companies—such as InterEx (which signed a 44.7 billion won investment relocation agreement at the end of 2023, involving a demo factory and shared research lab in Daegu), BigWave AI, and J-S System—also joined, actively supporting AX implementation in real manufacturing environments.
Participating demand-side companies expressed satisfaction, noting that this initiative provided a foundation for sustainable development based on new technology. AI supply companies also secured opportunities to connect industry and AI, developing services using real, industrial data that would otherwise be inaccessible.
◆ Industrial and AI Firms: A “Win-Win” Outcome
AI supplier UB-Mtek developed an AI-based auto control system for rivet processing, improving production efficiency at demand-side firm PHA. PHA, which manufactures door latches, modules, and hinges, worked with UB-Mtek to build an AI-based quality prediction and servo-axis position control system for rivet processing. Previously, when vehicle models or processing environments changed, settings had to be entered manually—causing frequent errors and delays.
After implementing the AI system, delays were greatly reduced, optimal settings were recommended for high quality, operational efficiency rose by about 7%, and both quality and labor costs improved.
Another AI solution provider, InterEx, together with InnoTech (a manufacturer of EV reduction gears and transmission shafts), developed an AI-based CNC processing defect prediction system. InnoTech had suffered losses from defects or failures in CNC processes, where operator skill inconsistencies led to product dimension errors. By introducing AI methods including ensemble modeling, they could predict tool lifespan and replacement timing, significantly improving productivity. Efficiency rose from around 60% to 80%, and defect rates for their main product (ball lamps) fell by approximately 0.4%.
Similarly, ComputerMate developed an AI solution that analyzes data to derive optimal production conditions minimizing defects. Kyungchang Industry used this to reduce defects on the chassis actuator line. By continuously collecting and monitoring operational condition data from production and inspection equipment, they substantially reduced dependence on operators and decreased defect rates in manufacturing.
◆ Opening the Path to Manufacturing Innovation via AI: Building a Sustainable Manufacturing AI Ecosystem
Daegu has been expanding its AI ecosystem over the past few years, but the region’s industrial structure—rooted in manufacturing-based “foundational industries”—posed limits. Overcoming these structural constraints required coordinated support tied to central government ministries, and Daegu seized opportunities whenever they arose. As a result, in May 2025, the city was selected among 11 municipalities for the Ministry of SMEs and Startups’ “2025 Regional Specialized Manufacturing Data Activation Project,” taking another major step toward building a sustainable manufacturing AI ecosystem.
From 2025 through December 2027, a total of 12 billion won (6 billion national funding, 5.52 billion city funding, 0.48 billion private investment) will be invested to construct a manufacturing data activation platform and support AI technologies across manufacturers. The initiative focuses not merely on automation, but on “intelligence” through advanced utilization of manufacturing data.
This effort, led by Daegu Techno Park, includes:
* MI Cube Solution (expert collective for smart manufacturing innovation),
* Acryl (AI application and big data specialist company),
* Korea Institute of Industrial Technology (field-based regional innovation institution supporting on-site AI solution development).
In this consortium, Acryl is tasked with building the platform-based AI infrastructure, providing maintenance, and developing chatbot services suitable for manufacturing environments.
◆ Beyond Automation: Accelerating “DAX (Digital + AI Transformation)”
Over the next three years, a regional manufacturing AI service platform will be built. Key deliverables include:
* Software conforming to international AAS standards for manufacturing data management, enabling integration of reliable data from disparate equipment and systems to improve AI application efficiency;
* Real-time data analytics to detect anomalies early, optimize processes, and reduce defects;
* Specialized LLM-based AI services tailored for manufacturing data, capable of explaining complex decisions with clear rationale and context—boosting trust and usability among field operators and managers;
* A manufacturing AI service portal offering tailored digital transformation insights, industry/company-size-specific guides based on real AI adoption cases, AI simulation and chatbot support features for quality prediction and anomaly analysis;
* Demonstration projects (single, cross-sector, AAS-based, AI simulation): covering transport machinery in 2025, general/precision machinery in 2026, metal machinery in 2027—alongside customized field support and consulting to strengthen industrial competitiveness and build sustainable growth.
Director Cho Kyung-hwan of Daegu Techno Park’s Smart Manufacturing Innovation Center commented: “Through this project, we aim to overcome structural limitations such as low digital transformation rates, aging processes, and an aging workforce. Manufacturing data standardization, AI validation, and data-driven productivity improvements will elevate regional industries and strengthen corporate competitiveness.”
[Daegu Ilbo – 80th Anniversary] [Era of Great Transformation, Daegu Companies] Part 1: Daegu Accelerates the Speed of “AI Transformation (AX)”
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