South Korea’s Ambitious AI Initiative: Competing with Global Giants
From tech giants to innovative startups, South Korea is making significant strides in artificial intelligence. Local players are developing large language models tailored specifically to the nation’s language and culture, positioning themselves to compete with global heavyweights like OpenAI and Google.
Last month, South Korea launched its most ambitious sovereign AI initiative to date, pledging ₩530 billion (approximately $390 million) to five local companies that are building large-scale foundational models.
This strategic move underscores Seoul’s determination to reduce its reliance on foreign AI technologies. By bolstering its domestic capabilities, South Korea aims to enhance national security and maintain tighter control over sensitive data in an increasingly AI-driven world.
The Ministry of Science and ICT has chosen five frontrunners for this ambitious project: LG AI Research, SK Telecom, Naver Cloud, NC AI, and the startup Upstage. Every six months, the government will review the progress of these companies, rewarding high performers and adjusting funding based on demonstrated success in the AI landscape.
Companies in the Race
Each selected organization brings unique advantages to South Korea’s AI growth. Conversations with several of these companies reveal their plans to take on established players like OpenAI and Google.
LG AI Research: Exaone 4.0
LG AI Research, part of the renowned LG Group, has introduced Exaone 4.0, a hybrid reasoning AI model that combines advanced language processing with sophisticated reasoning capabilities. This latest version builds on the earlier Exaone Deep model and aims to deliver practical value beyond what general-purpose models typically offer.
According to LG co-head Honglak Lee, the focus is not just on scaling but on making the AI more intelligent by refining the data used for training. By leveraging real-world industry data from sectors such as biotech and advanced materials, LG hopes to improve the model efficiently.
“As LG’s models improve, our partners can deliver better services, which generate greater economic value and richer data,” Lee explained. The company’s strategy relies on efficiency rather than merely outspending competitors, aiming to outperform through smart innovations.
SK Telecom: A.X
SK Telecom (SKT) is another key player, having launched its personal AI agent service A. in late 2023. In July 2025, the company released its large language model, A.X, leveraging the Chinese open-source model from Alibaba Cloud, Qwen 2.5. The model comes in two versions: a substantial 72 billion-parameter model and a lighter 7 billion-parameter version.
SKT claims that A.X processes Korean inputs approximately 33% more efficiently than GPT-4, demonstrating a specific local advantage. As of August 2025, the A. service had attracted around 10 million subscribers, showcasing its growing influence.
“SK Telecom’s role is to act as a bridge between cutting-edge model research and real-world impact,” said Taeyoon Kim, head of the foundation model office at SK Telecom. The company is also developing a robust AI infrastructure by partnering with AWS and engaging in collaborative projects with academia, such as a partnership with MIT focused on advanced manufacturing.
Naver Cloud: HyperCLOVA X
Naver Cloud, the cloud services arm of South Korea’s leading internet company, introduced its large language model, HyperCLOVA, in 2021. Its upgraded version, HyperCLOVA X, expands the scope of AI applications with features such as CLOVA X, an AI chatbot, and Cue, a generative AI-driven search engine that aims to rival Microsoft’s CoPilot-enhanced Bing.
The company believes AI models should act as “connectors” to improve data accessibility across various systems. Naver is unique in claiming an “AI full stack,” having developed its model from the ground up and running data centers, cloud services, and consumer applications that effectively utilize AI technology.
By embedding AI into core services—such as search, shopping, and finance—Naver aims to transform user experiences. “Our AI is already globally competitive at comparable scales,” a spokesperson noted, emphasizing the importance of refining modeling techniques and ensuring sufficient capital for future development.
Upstage: Solar Pro 2
As the sole startup in this initiative, Upstage launched its Solar Pro 2 model in July 2025. This model has gained notable recognition as a frontier model by Artificial Analysis, competing directly with global heavyweights. With 31 billion parameters, Solar Pro 2 focuses on delivering superior performance tailored for the Korean context.
“Solar Pro 2 has outperformed global models on major Korean benchmarks,” said Soon-il Kwon, executive vice president at Upstage. The startup aims to create specialized models for sectors like finance and law, laying the groundwork for a thriving Korean AI ecosystem led by “AI-native” startups.
In conclusion, as South Korea positions itself to compete with global AI leaders, the commitment of its local companies to innovation and effective modeling techniques will play a crucial role in shaping the future of artificial intelligence in the region.
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