Four ministries are jointly promoting the AI Transformation (AX) initiative in the defense and industrial sectors. On the 3rd, the Ministry of SMEs and Startups, along with the Ministry of National Defense , the Ministry of Science and ICT , and the Ministry of Trade, Industry and Energy, announced that they have established a cooperative system that will encompass everything from securing core AX technologies to verification in the defense sector, industrial application, and expansion to early-stage startups and SMEs. The goal of this agreement is to discover and foster innovative startups and SMEs applicable to defense and industrial sites, and to align the verification-commercialization pathway at the government level.
The structure and meaning of the AX cooperation system
The agreement views AI Transformation (AX) as a national strategic task and links inter-ministerial roles in a phased manner. The Ministry of Science and ICT's technological accumulation and R&D will contribute to securing core AX technologies, while the Ministry of National Defense will verify their field suitability through defense-related demonstrations. The Ministry of Trade, Industry and Energy will design industrial applications of proven technologies to establish a path for commercialization, while the Ministry of SMEs and Startups will support their expansion to startups and SMEs. This will ensure a seamless value chain of technology, verification, application, and diffusion, laying the foundation for fostering dual-use innovation across the civilian and military sectors.
The key is mitigating risks for early-stage companies. Defense verification requires meeting high reliability and safety requirements, which accelerates technological maturity. Subsequent industrial applications will require multi-agency collaboration to confirm demand, and startups and SMEs will secure references and supply chains during the expansion phase, creating a virtuous cycle. AI, robotics, and autonomous driving are key trends that enhance productivity and safety through automation and advanced decision-making across defense and industry, and are areas where investment is expanding both domestically and internationally.
A Startup Perspective: The Continuous Path from Proof-of-Sale to Commercialization
This agreement is highly likely to lower the barriers to entry for startups and SMEs. By providing a continuous process for securing field data through defense verification and resolving integration issues with legacy systems through industrial application, startups can quickly verify product-market fit (PMF). In particular, AX offers many convergence solutions that combine software (algorithms, data) and hardware (robot platforms, sensors). Therefore, interagency cooperation is also valuable for coordinating non-technical elements such as procurement, regulations, and standards.
As the Ministry of SMEs and Startups (MSS) announced, this collaboration focuses on discovering and fostering innovative startups and SMEs. By establishing a path from demonstration to industrial application, early-stage companies can design growth based on demand from both the defense and industrial sectors. This will enhance the value of the technology's dual utility (defense and civilian), creating an environment where investors can reevaluate the expected returns relative to risk. However, for tangible results, clear evaluation criteria for demonstration projects, standardization and interface definitions for the industrial application stage, and streamlined procurement procedures for the diffusion stage must be implemented in parallel.
From an investment perspective, AX involves complex challenges such as data accessibility, model reliability, real-time performance, and safety certification. Linking government-led verification and application stages can reduce the costs of commercial validation (reference) and regulatory compliance, thereby improving investment efficiency across the value chain. In particular, technologies that have undergone Ministry of National Defense verification are expected to provide market signals of reliability, accelerating their adoption in industrial settings. However, the execution and sustainability of interagency cooperation are key, and the speed and quality of the transformation of agreements into actual tasks, budgets, and schedules will likely determine success or failure.
This agreement establishes a structure where AX-related technologies and services are cross-validated across defense and industrial settings, expanding the potential for technology commercialization by domestic startups and SMEs. Solutions that meet the demanding requirements of the defense industry are more likely to gain high trust in the industrial sector, while the efficiency and cost optimization gained through industrial applications contribute to the scalability of the defense industry. As the working design of the agreement is refined, the scope of data sharing, ethics and security standards, and supply chain linkage models must be clearly addressed.
Ultimately, accelerating AX isn't a matter of a single technology, but rather a matter of multi-departmental and multi-sectoral coordination. Whether innovative startups and SMEs can achieve a tangible growth path within the chain of technology acquisition, validation, application, and diffusion hinges on transparency and predictability in the implementation phase.
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