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South Korea’s $390M Push to Build Homegrown AI Leaders

Cansin Cengiz

27 Sep 2025 — 2 min read

South Korea’s Ambitious Drive for Sovereign AI

South Korea is taking major steps to build its own advanced AI ecosystem, aiming to reduce reliance on foreign technologies like OpenAI and Google. In August 2025, the government launched its largest sovereign AI initiative yet, allocating ₩530 billion (about $390 million) to foster local development of large language models (LLMs) tailored to Korean language and culture.

Why Sovereign AI Matters for South Korea

This bold initiative is about more than technological pride. By investing in homegrown AI, South Korea is prioritizing:

National security: Ensuring critical data stays within national borders.
Data sovereignty: Gaining better control over sensitive and strategic datasets.
Economic competitiveness: Catching up with and even surpassing global AI leaders in areas relevant to Korean business and society.

The Five Key Players

The Ministry of Science and ICT selected five organizations to compete for continued funding and leadership:

Every six months, their progress will be reviewed. Underperformers may lose support, and only the top two will advance to lead South Korea’s sovereign AI future.

How Each Contender Stands Out

LG AI Research: Exaone 4.0

LG’s R&D arm developed Exaone 4.0, a hybrid reasoning model blending broad language skills with advanced problem-solving. Rather than pursuing sheer parameter count, LG focuses on refining training data and maximizing efficiency. Its advantage? Access to real-world industry data across biotech, manufacturing, and materials, which helps tailor models for practical, high-value use cases.

SK Telecom: A.X

SK Telecom rolled out its latest LLM, A.X 4.0, based on Alibaba Cloud’s Qwen 2.5. It comes in 72B and 7B-parameter versions and processes Korean 33% more efficiently than GPT-4o. SKT’s unique edge is its telecom data: from navigation to mobility, giving its AI real-world utility. With about 10 million subscribers on its "A." AI service, SKT is also investing in AI infrastructure and collaborating with global partners to accelerate AI research and deployment.

Naver Cloud: HyperCLOVA X

Naver, South Korea’s leading internet company, built HyperCLOVA X from scratch. Its full-stack approach covers everything from data centers to AI-powered applications—think search, shopping, and finance, all tailored for Korean users. Naver’s focus is on connecting legacy systems through AI, offering businesses tools to build custom solutions, and emphasizing real-world data relevance over model size.

Upstage: Solar Pro 2

The only startup in the cohort, Upstage launched Solar Pro 2, a 31B-parameter model recognized as a "frontier model". Despite its smaller size, it outperforms much larger models on Korean benchmarks and is designed for cost-effective, sector-specific deployment in industries like finance, law, and medicine. Upstage emphasizes business impact and ecosystem-building for AI-native startups.

What’s Next?

South Korea’s approach is dynamic: rather than one-size-fits-all models, it encourages specialized, efficient AI tuned to local needs. The government’s competitive funding model ensures only the most capable teams will lead the charge.

With billions invested and a sharp focus on national priorities, South Korea is positioning itself as a formidable player in the global AI landscape—one that could set a template for other countries seeking digital independence.