South Korea plans to invest 4.7 trillion won, which equals $3.49 billion, into a homegrown frontier artificial intelligence model. This state-backed equity investment sits inside the proposed 2027 budget. The national parliament still needs to approve the spending plan. A second funding track will help push Korean-built models into the wider domestic economy.
Open competition will select future winners
Two finalists will soon emerge from an active contest between LG AI Research, SK Telecom, and Upstage. These current finalists will not automatically receive the new round of government money. Instead, officials are organizing a fresh open competition that local startups can also enter. Authorities admit that domestic technology cannot outspend top US corporations. However, officials believe local systems can match leading open models coming out of China.
Prior investments highlight massive resource gaps
The government previously promised 530 billion won, roughly $390 million, to five chosen companies when the current contest began. The new funding proposal multiplies that initial sum by nearly nine times. This spending sits far below the capital deployed by American hyperscalers. Google, Amazon, Microsoft, and Meta plan to spend about $725 billion combined in 2026 alone, mostly for artificial intelligence data centers.
Domestic infrastructure efforts continue to grow
South Korean firms are rapidly expanding local compute capacity through separate deals. Samsung and SK reached an agreement with OpenAI in October 2025 to scale up national artificial intelligence infrastructure. Samsung, SK Hynix, and the government also revealed a $590 billion initiative in June to boost domestic chip manufacturing. Local consumers currently spend heavily on foreign platforms. South Koreans spent more money on ChatGPT and comparable subscriptions than on Netflix in December 2025.
Parliament must vote to approve the proposed 2027 budget.
