Korea to launch $3.5 bil. frontier AI project next year

Korea will launch a state-backed project next year to develop a frontier artificial intelligence (AI) model capable of competing with leading Chinese open-source models, with the government planning to make 4.7 trillion won ($3.48 billion) of equity investment in what could be a special purpose company involving the country’s top AI model developers.

During a press conference Friday, Second Vice Minister of Science and ICT Ryu Je-myung also said the ongoing national AI foundation model project, which drew significant attention as a competition to develop Korea’s most capable homegrown AI model, will proceed as planned, but its focus will shift toward models tailored to specific industries and real-world applications.

"The frontier AI project will begin next year," he said. "It will be reflected in next year's budget, and we will pursue a higher goal by breaking through current technological limitations."

He said the government and domestic companies both shared views that the global competition for advanced AI models has entered a completely different phase since the preview of Claude Mythos emerged in April.

With rivals competing at enormous scale, calls have grown for a fundamental shift from the competition-based approach used for the national foundation model project, along with investment on an entirely different scale.

For the frontier AI project, the government has earmarked 4.7 trillion won for equity investment, rather than just providing support.

The government plans to select key companies that will participate in the project through open application and evaluation processes, while using the method of equity investment so that the returns can ultimately be shared with the public.

Under this approach, setting up a special purpose company has emerged as one of the options for carrying out the investment, Ryu said.

Details such as the project's structure, anchor companies and startup participation have yet to be finalized, but the investment is expected to include 3.9 trillion won to provide 10,000 Nvidia Vera Rubin graphics processing units (GPUs) and 800 billion won to purchase training data.

Participating companies will be required to match the government investment with corresponding private sector funding. The ministry plans to unveil an outline of the application criteria later this month.

“The question was whether we should target a mid-tier model or one capable of competing with the world’s leading models,” Ryu said.

“We also had to decide whether simply giving more GPUs to companies and having them compete, or whether we need to pool all available resources and concentrate them to close the gap with frontier models. When we asked the companies participating in the national foundation model project, they said competing at the frontier level would require an approach like the frontier AI project.”

The national foundation model project was launched in 2025 to develop Korea’s most capable homegrown AI models through survival-type competition. Three teams are now in the third stage of the competition, after which two finalists will be selected by the end of this year.

The original plan was to provide each of the final two participants with 1,000 GPUs throughout 2027. Ryu said the plan will remain in place, but the two finalists will be able to choose either to join the frontier AI project or focus on expanding their national foundation models for industry-specific applications.

"The competition created a stigma for companies that were eliminated and stirred public controversy," Ryu said. "We were also aware of this risk in the beginning, but it was unavoidable as we sought to overcome resource constraints through intense competition.”

The ministry said in a statement that the frontier AI project is not a replacement for the national foundation model project but a new initiative aimed at addressing national security needs and other major challenges facing humanity. It added that it would link the two projects so that the technologies, talent and ecosystem developed through the national foundation model project could support the frontier AI project.