Physical AI drives manufacturing shifts and regional labor risks

The rise of Physical AI is reshaping the manufacturing sector, creating both risks of regional labor disparities and opportunities for industrial innovation. An analysis by the Bank of Korea suggests that while generative AI employment is concentrating in the Seoul metropolitan area, Physical AI—which focuses on automating physical tasks—is more likely to impact non-metropolitan regions like Gyeongsangnam-do, where manufacturing accounts for a significant portion of the economy.

To mitigate potential employment shocks in manufacturing-heavy regions, the South Korean government is investing approximately 676.3 billion won through 2030 to develop human-AI collaborative physical intelligence models. This initiative aims to utilize data from local production processes to advance precision manufacturing in sectors such as shipbuilding, defense, and aerospace.

Globally, the competition in Physical AI is shifting from robot hardware performance to the ability to secure and learn from real-world factory data. Companies like Tesla and Amazon are utilizing their production environments as testing grounds for AI models. In South Korea, firms such as Michelo Robotics, a subsidiary of Finger, are working to digitize the expertise of skilled workers, converting manual techniques into data that can be applied to existing industrial robots to enhance automation without requiring entirely new hardware.