How a Small Sewing Factory Adopts a Smart Factory Through a Government Support Program
Smart factories for small sewing factories 3/3 · How a Small Sewing Factory Adopts a Smart Factory Through a Government Support Program
KEY POINTS
For a small factory, adopting a smart factory is a heavy cost. Korea’s 2026 Manufacturing AI Specialized Smart Factory Support Program has two tracks. A factory that has no data yet starts with the Data Collection and Verification track (up to 6 months, up to KRW 50 million), and a factory that already has data can apply directly to the AI Factory Build track (up to 9 months, up to KRW 200 million). The support ratio is up to 50% in both tracks. The adopting company files the application, and the adopting company and the supplier write the project plan together.
The factory covered in Part 1 and Part 2 is being built under a government support program. SIJE takes part in this project as the supplier. This post goes through the support tracks and the procedure based on the 2026 program notice.1 Conditions and dates can change every year, so check that year’s notice when you apply.
Two support tracks
The program supports small and medium-sized and mid-tier manufacturers in Korea that want to build an AI smart factory. There are two tracks, and an applicant chooses one.1
| Track | Support period | Support limit | Support ratio | Target level |
|---|---|---|---|---|
| AI Factory Build | Up to 9 months | Up to KRW 200 million | Up to 50% | Intermediate 1 or higher |
| Data Collection and Verification | Up to 6 months | Up to KRW 50 million | Up to 50% | None |
Support conditions in the 2026 notice1
A support ratio of up to 50% means the government supports up to half of the project cost and the company bears the rest. The budget in the 2026 notice was KRW 80 billion, for around 400 projects.
Which track fits our factory
The criterion is whether the factory already has data it can use.
A factory that has data applies directly to the AI Factory Build track. A factory that first needs a system for collecting and managing data starts with the Data Collection and Verification track. There are three points to know when receiving support for the two stages in a row.1
- The government support for the two stages combined is up to KRW 200 million.
- Finishing stage 1 does not lead automatically into stage 2. An application for stage 2 goes through the selection evaluation again.
- An application for the Data Collection and Verification track must also include the project plan for the final goal, the AI Factory Build.
The factory in Part 1 had already completed data collection and verification through its five-week PoC in 2025. It therefore applied directly to the AI Factory Build track.2
The adopting company and the supplier
There are two parties in this program.1
| Party | Eligibility | Role |
|---|---|---|
| Adopting company | A small and medium-sized or mid-tier company among manufacturers in Korea | Applying, paying the company’s share, providing and operating the site |
| Supplier | A company registered in the supplier pool of the smart factory project management system | Designing and building the system |
The adopting company and the supplier1
The adopting company files the application. Once it passes the eligibility review, the adopting company and the supplier form a consortium and write the project plan together. An adopting company that has the staff and capability to develop the solution can also apply alone, without a supplier.
From application to completion
The procedure runs in the following order.1
| No. | Step | Details |
|---|---|---|
| 1 | Application | The adopting company submits the application online |
| 2 | Eligibility review | Review of submitted documents and qualification criteria |
| 3 | Project plan | Written by the adopting company and the supplier as a consortium |
| 4 | Technical evaluation | In-person evaluation based on the project plan and a presentation |
| 5 | Site check and cost calculation | Checking the plan against the site, reviewing whether the project cost is appropriate |
| 6 | Final selection and agreement | Supported projects confirmed, agreement signed |
| 7 | Kickoff and interim check | Kickoff report submitted, interim check within 3 months of the agreement |
| 8 | Final check and final evaluation | Check after the build is complete, with a result of pass, fail or supplement |
Summary of the procedure1
A project that receives a supplement result in the final evaluation goes through intensive after-sales service of up to 6 months and is evaluated again.
It takes several months from application to agreement. It is better to settle the build scope with a supplier before the notice comes out.
What to know when planning the project cost
The project cost has items that must be included and items with limits on how they can be budgeted.1
| Item | Details |
|---|---|
| Mandatory costs | Accounting settlement fee, training cost (KRW 1 million), technology escrow fee (KRW 450,000) |
| In-kind budgeting | Up to 20% of the company’s share (maximum KRW 40 million), cloud service fees and the adopting company’s labor cost only |
| Cloud service fees | Up to 3 years from the start of use, up to 5 years for small companies |
| Mentor group | Taking part in at least one of planning guidance or build guidance is mandatory |
| Security | A security plan to prevent leakage of company data is mandatory |
Project cost budgeting and mandatory items1
Technology escrow is a scheme for depositing the core information of the build deliverables with an escrow agency. The adopting company has to place the build deliverables in escrow for 2 years or more when the project ends. Escrow makes it possible to prove the fact of development and the date of possession, and it can also be used for maintenance.
The mentor group is a scheme for receiving expert guidance while writing the project plan or during the build. A company that did not receive planning guidance has to receive build guidance after the agreement and before the interim check. Build guidance is 4 sessions, and the company’s own share is KRW 210,000.
What to check at the factory before applying
Apart from the paperwork, a build needs a few things prepared at the factory to go properly. These are the items checked before the build at the factory in Parts 1 and 2.2
- Power: whether there is an outlet at each place where equipment will go. The tablet in Part 2 has no battery, so each sewing cell needs a dedicated outlet.
- Network: whether wireless coverage reaches the whole line.
- Person in charge: whether there is someone to look after the system after the build. At the factory in Part 1 this was also the item rated as the biggest risk in the build plan.
- Consultation with employees: equipment that involves operators, such as cameras, requires consultation with the employee representative in advance.
- Existing systems: if an ERP is in use, how it will be connected, and whether there is an alternative path of moving data by file when a connection is not possible.
Wrapping up
Over three posts we covered why the existing approach did not fit small sewing factories, the design changed for a small line, and the steps for adopting through a government support program. The order in short: check whether the factory has usable data, choose the track, settle the build scope with a supplier, then apply. Once the build is finished we will follow up with the installation process and the measured results.
Glossary
- Adopting company: the manufacturer that builds the smart factory at its own factory.
- Supplier: the company that designs and builds the smart factory system.
- Consortium: the partnership an adopting company and a supplier form to carry out one project together.
- Company’s share: the amount the adopting company pays, which is the total project cost minus the government support.
- In-kind: covering part of the company’s share with resources the company already uses, such as labor cost or service fees, in place of cash.
- Technology escrow: a scheme for depositing the core materials of the build deliverables with a third-party escrow agency.
👉 Why Smart Factory Systems Did Not Fit Small Sewing Factories
👉 One Tablet per Sewing Cell: Data Collection Designed for a Small Line
References
- Ministry of SMEs and Startups, Notice of the 2026 Manufacturing AI Specialized Smart Factory Support Program (2026년도 제조AI특화 스마트공장 구축지원사업 공고). Smart factory project management system Support tracks and conditions, eligibility, evaluation and procedure, project cost budgeting criteria, technology escrow, and the manufacturing DX mentor group. ↩
- SIJE internal material, build project summary. How data collection and verification were completed first through the 2025 PoC, and the items checked before the build (power, network, operating staff, consultation with employees, connection to the existing ERP and the alternative path). ↩
