South Korea announced ₩4.7 trillion ($3.49 billion) in government-backed equity investment to develop a homegrown frontier AI model capable of rivaling Chinese leaders.

South Korea is committing 4.7 trillion won ($3.49 billion) in government-backed equity investments to develop a homegrown frontier AI model, with funding included in the proposed 2027 budget pending parliamentary approval. A parallel funding track will support adoption of Korean-built models across the country's economy.

The initiative takes the form of an open competition that any startup can enter, rather than automatically funding the current finalists from LG AI Research, SK Telecom, and Upstage. Government officials have been candid about Korea's competitive position: the country cannot match the largest US technology companies but aims to develop capabilities comparable to leading open models from China.

The new funding represents a roughly ninefold increase from the current competition, which began with government pledges of 530 billion won (approximately $390 million) to five selected companies. For perspective, Google, Amazon, Microsoft, and Meta are planning combined investments of around $725 billion for 2026 alone, most of it directed toward AI data centers.

Korea's tech industry is already accelerating infrastructure investment. In October 2025, Samsung and SK forged a partnership with OpenAI to expand AI infrastructure in the country. In June 2026, Samsung, SK Hynix, and the government unveiled a $590 billion push to scale up chip production. Despite these efforts, Korean consumers have been paying foreign providers for most AI services—in December 2025, they spent more on ChatGPT and similar subscriptions than on Netflix.