Seoul: At CES 2026, the transition from disembodied to embodied intelligence was marked as AI technology moved from the cloud to tangible applications in factories, streets, and homes. This shift in the AI domain has sparked discussions not just about AI's communicative abilities but its practical implementations.
According to Yonhap News Agency, Nvidia's concept of "physical AI" has transitioned from a futuristic idea to a practical framework for integrating silicon-based reasoning with mechanical action. This evolution signifies a notable transformation in the global economy as the digital revolution begins to manifest in physical forms. For a manufacturing powerhouse like South Korea, this development might have signified a moment of triumph, yet it has instead raised concerns about the nation's readiness to embrace this new industrial frontier.
The introduction of physical AI represents a departure from generative models, extending AI applications into areas such as manufacturing, logistics, transportation, and household management. Nvidia's CEO, Jensen Huang, has projected the market potential for this technology to reach $50 trillion, highlighting the growing importance of these advancements. At CES, Nvidia showcased its Vera Rubin superchip platform and the Alpamayo autonomous driving model, indicating a shift toward deploying these technologies in real-world scenarios, as seen in partnerships with industrial leaders like Siemens.
Globally, the competition to harness physical AI is escalating. In the United States, private sector innovation aligns with strategic government interventions, exemplified by the Trump administration's acquisition of a 10 percent stake in Intel to maintain technological leadership. Companies like Uber, in collaboration with Lucid and Nuro, are advancing autonomous vehicle testing in San Francisco, with commercial launches imminent. Meanwhile, China is accelerating efforts, with government-backed initiatives propelling humanoids into commercial viability, supported by robust local supply chains.
On paper, South Korea possesses the requisite infrastructure to excel in this domain. The country boasts the highest density of industrial robots worldwide and a strong manufacturing sector producing valuable data across various industries. At CES, Korean companies such as Hyundai's Boston Dynamics and LG showcased their innovations in humanoid and domestic robotics, respectively. However, regulatory obstacles hinder progress. Autonomous driving, for instance, is confined to restricted zones requiring human oversight, and higher levels of automation are pursued overseas. Undefined safety standards for humanoid robots further complicate deployment within South Korea.
The repercussions of these regulatory constraints are evident. Hyundai plans to implement its Atlas robot in a plant in Georgia, USA, by 2028, bypassing Korea due to labor and regulatory challenges. The Korea Chamber of Commerce reports numerous legislative proposals imposing additional burdens on businesses, with outdated asset thresholds affecting tax benefits and research incentives.
The consequences are stark. Over the past four years, the US has produced 229 new unicorn companies, while South Korea has seen only two, none of which are in the AI sector. Although the South Korean government's promise of 10.1 trillion won for AI transformation is significant, it falls short without regulatory reforms to prevent innovation from moving abroad.
As AI technology becomes an integral part of the physical economy, South Korea's challenge lies in aligning its institutional frameworks with technological advancements. The country's ability to benefit from physical AI will rely more on regulatory agility and policy adaptation than on technical capabilities alone.