Ulsan Ranks First in Smart Factories, Last in Local AI Supply

Ulsan supplied only 2.2% of the AI products and services its non-ICT manufacturers used in 2024 — the lowest of Korea's 17 metropolitan regions and far below the national average of 29.3%. The figure anchors a new Bank of Korea assessment that rates the industrial city's readiness for AI transformation as strong in infrastructure and weak in talent and local supply.

Min Dong-gil, a manager, and Do Kyung-tak, a team head, in the planning and research team at the Bank of Korea's Ulsan branch, released the report, titled "Assessment of Ulsan's Readiness for Artificial Intelligence," on the 10th. They analyzed AI use among local companies and scored readiness across five areas: talent, innovation activity, industrial ecosystem, physical infrastructure and policy.

How much AI do Ulsan companies actually use?

AI adoption among Ulsan companies rose to 23.0% in 2024 from 6.3% in 2022 — a 16.7 percentage-point gain. That still trailed the national average of 32.9% and ranked 12th among 17 metropolitan cities and provinces.

The usage profile skews basic:

• Free services accounted for 64.7% of AI use.
• Corporate security led purposes at 60.7%; cost reduction followed at 23.8%.
• R&D and innovation activity made up 0.1%, against a 9.7% national average.
• Firms cited lack of infrastructure and personnel (33.3%), cost burdens (31.9%) and technical complexity (27.9%) as adoption barriers.

Where does the city's infrastructure stand?

Physical infrastructure drew favorable marks. Ulsan's participation rate in government smart factory support programs stood at 22.1%, the highest in the country. Its electricity self-sufficiency rate reached 113.6%, ninth nationwide; its 5G download and upload speeds ranked eighth and fifth.

An AI-dedicated data center worth about 7 trillion won ($4.8 billion) is under construction at the Mipo National Industrial Complex, targeted for completion in 2029. The city's designation as a distributed energy special zone is expected to improve power supply.

One liability stands out: 81.2% of Ulsan's industrial complexes broke ground more than 20 years ago, the third-highest aging share in the country.

What about innovation and the local ecosystem?

Innovation metrics split sharply. Ulsan ranked fourth in registered AI patents relative to its economically active population, sixth in university research spending, fourth in AI startups with 34, and fifth in investment raised at about 90 billion won. Trials with manufacturers and universities are underway, including automated evaluation of non-destructive equipment testing at SK Enmove and raw-material demand forecasting plus spent-battery processing monitoring at Korea Zinc.

The ecosystem figures lag. The city ranked 14th in university research papers, 13th in R&D spending by AI companies, 14th in the number of AI-related businesses and 15th in their combined revenue. Local sourcing is the weakest link: Ulsan companies buy AI products mainly from Gyeonggi Province at 41.1% and overseas at 30.0%, and AI services from Seoul at 64.5%.

Can Ulsan fix its talent gap?

Only partially so far. AI-related majors accounted for 13.2% of bachelor's graduates and 8.0% of master's and doctoral graduates from Ulsan universities — both above the national average — but small enrollment quotas cap output at roughly 500 graduates a year, or 1.0% of the national total.

With jobs concentrated in greater Seoul, Ulsan ranked 12th in employed bachelor's holders in ICT fields relative to its economically active population, 11th in employed master's and doctoral holders, and 13th in workers in AI-related industries and occupations. The city's job-openings-to-seekers ratio exceeded the national average, but Ulsan accounts for only 1.5% of job openings nationwide, limiting workers' choices.

The city is currently pursuing 100 AI projects worth a combined 1.4947 trillion won ($1 billion) as of September 2026, centered on physical AI and data centers.

What does the report recommend?

The authors called for faster execution of planned projects and an ecosystem built around manufacturing sites. Specific proposals:

• Expand project-based AI training for workers already employed.
• Pair local university students with municipal pilot projects through internships leading to employment.
• Give small and midsize companies phased support, from subscription fees and consulting to advanced solutions.
• Require client firms to share development costs when supporting AI companies, and prefer out-of-region firms that set up in Ulsan and hire locally.
• Renovate aging industrial complexes, standardize and share manufacturing data through secure data rooms, and improve living conditions for young residents.

"The core of Ulsan's AI transformation lies in connecting the AI demand of large-scale manufacturing sites, which other regions find hard to match, to technology development and business opportunities," Min said. "The planned policies must be carried out quickly so they translate into tangible results, such as higher revenue for local AI companies and job creation."