- City rolls out “AI factory” framework for industrial upgrade
- Subsidies and large-model deployment to support adoption
Hangzhou is stepping up efforts to integrate AI into manufacturing, aiming to build more than 50 “AI factories” this year as part of a broader drive to modernize its industrial base.
The initiative was announced at a city-level meeting on April 27, where officials introduced the “AI factory” concept for the first time.
The model refers to factories powered by AI and built around the integration of data, algorithms, computing power and real-world applications, reshaping processes from design and testing to production, management and sales.
Factories will be ranked across three tiers based on the depth of AI adoption.
Entry-level sites will focus on applying AI in selected scenarios, while mid-tier factories are expected to develop coordinated decision-making across multiple workflows.
The most advanced tier will aim for fully data-driven, closed-loop operations spanning the entire production cycle.
Hangzhou’s push draws on its industrial base of nearly 7,500 large-scale manufacturers with annual main-business revenue of 20 million yuan ($2.93 million) and more.
These include 28 companies listed among China’s top 500 manufacturers, providing a wide range of use cases for AI deployment.
To support the rollout, the city unveiled a 2026 action plan that calls for deeper adoption of large models such as Qwen, DeepSeek and projects linked to Zhejiang Lab, a top-tier provincial research institute.
Authorities aim to nurture at least one nationally influential industry model and establish a group of benchmark factories, according to the Hangzhou government.
Financial incentives will also be introduced, including subsidies and so-called “digital transformation vouchers,” offering support across the full stack—from computing capacity to application scenarios—to lower barriers for companies adopting AI.
The plan forms part of the city’s sprawling “135N” framework, which sets out a roadmap for strengthening models, computing infrastructure, data and applications.
Specifically, “1” represents a single overarching goal of strengthening models, computing power, data and applications; “3” denotes three system-level designs guiding implementation; “5” stands for five priority reforms, including AI factories, industry-specific large models, industrial agent platforms, service providers and small and medium-sized enterprise (SME) upgrades; and “N” refers to the set of rolling annual tasks used to execute the plan.
Under this strategy, the city will focus on building AI factories, advancing industry-specific models, developing industrial agent platforms over the next three years, expanding service providers and upgrading SME manufacturers, with the goal of making AI-led industrial transformation a national benchmark.
