South Korea plans to invest 4.7 trillion won, approximately $3.49 billion, to build a homegrown frontier AI model aimed at rivaling leading Chinese models. The proposed funding is included in the 2027 budget, though it still requires approval from parliament. Additionally, a second funding track will support the adoption of Korean-built models throughout the national economy.
The government is launching an open competition that allows startups to enter alongside the current finalists from LG AI Research, SK Telecom, and Upstage, meaning these finalists will not automatically receive the new funding. South Korean officials have stated that while the country cannot compete with the massive investments of the largest US companies, it can successfully match leading open models from China.
This new funding plan significantly expands upon an earlier pledge of 530 billion won for five selected companies when the initial competition began. Meanwhile, local industry is heavily investing in compute capacity, such as Samsung and SK partnering with OpenAI to expand infrastructure and a $590 billion push to scale up domestic chip production. This initiative matters because South Korea is working to establish domestic AI capabilities as local consumer spending on foreign AI subscriptions continues to outpace entertainment services.