The South Korean government announced a $3.49 billion investment to develop a homegrown frontier AI model, aiming to rival China's leading models. This funding is part of the proposed 2027 budget, though parliamentary approval is still pending.
The plan includes a second funding track to support the adoption of Korean-built models across the country's economy. However, the two finalists in the current competition between LG AI Research, SK Telecom, and Upstage will not automatically receive additional funding.
Instead, the government is launching an open competition that startups can enter too. Officials have acknowledged that Korea can't compete with the largest US companies but can match leading open models from China.
"When the current competition kicked off, the government pledged 530 billion won (about $390 million) to the five selected companies. The new plan roughly multiplies that figure by nine," said a government official. This reflects a significant increase in investment compared to previous commitments.
The announcement follows a surge in South Korean industry investment in AI infrastructure. In October 2025, Samsung and SK struck a deal with OpenAI to expand AI infrastructure in the country. Then in June, Samsung, SK Hynix, and the government announced a $590 billion push to scale up chip production.
South Korean consumers have been paying mostly foreign providers for AI services. In December 2025, they spent more on ChatGPT and similar subscriptions than on Netflix. The government did not specify how the new model will be integrated into the market, and it remains unclear how the open competition will shape the final product.
Source: thedecoder
