South Korea bets 4.7 trillion won on homegrown frontier AI

South Korea's new plan roughly multiplies by nine the 530 billion won (about $390 million) it pledged to five selected companies when the current competition kicked off. Now the government is not simply extending that contest: it is launching an open competition that startups can enter too, and the two finalists — LG AI Research, SK Telecom, and Upstage — will not automatically receive additional funding. Officials have acknowledged that Korea cannot compete with the largest US companies, but they say it can match leading open models from China.

The state money sits alongside private spending already under way in South Korea. 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. The demand side is also visible: Korean consumers have so far paid mostly foreign providers for AI services, and in December 2025 they spent more on ChatGPT and similar subscriptions than on Netflix.

The outcome hinges on whether parliament approves the funding as part of the proposed 2027 budget, and on how the open competition is structured and who enters it. How much of the $3.49 billion actually reaches Korean model builders — rather than being spread across the economy through the second funding track for adoption of Korean-built models — is likely to shape whether the effort produces a frontier model that can match leading open models from China.