AI in smart manufacturing refers to the models themselves, such as predictive maintenance, computer-vision inspection, and generative-AI assistants. AI integration in smart manufacturing refers to connecting those models to operational technology and business systems so they can act, not just predict. The distinction matters because McKinsey’s 2025 State of AI survey shows most organizations already use AI but only about one-third scale it, and the gap is integration. A model that cannot reach the MES, ERP, or CMMS and trigger an action produces insight without an executed outcome.