A Sovereign AI Drive to Reduce Foreign Dependence and Boost Domestic Innovation

South Korea is making bold strides in the global AI arena, with a new initiative aimed at developing large language models tailored to the nation’s unique language and culture. The government has pledged ₩530 billion (about $390 million) to support five local companies in their pursuit of cutting-edge AI technologies, signaling a strategic effort to reduce reliance on foreign AI platforms such as OpenAI and Google.

The selected companies—LG AI Research, SK Telecom, Naver Cloud, NC AI, and startup Upstage—are each bringing distinct strengths to the table. LG AI Research, for instance, is advancing its Exaone 4.0 model, which combines broad language processing with advanced reasoning capabilities. The model, which has 32 billion parameters, already scores reasonably well on the Artificial Analysis Intelligence Index benchmark. LG is leveraging its deep access to real-world industry data, from biotech to advanced materials and manufacturing, to refine its models and deliver practical value beyond what general-purpose models can offer.

SK Telecom has launched A.X, a large language model built on top of the Chinese open-source model Qwen 2.5 from Alibaba Cloud. The A.X 4.0 model comes in two versions: a 72-billion-parameter version and a lighter 7B version. SK Telecom claims that A.X 4.0 processes Korean inputs about 33% more efficiently than GPT-4o, underscoring its local language edge. The company also rolled out its A. service, which includes features like AI call summaries and auto-generated notes, and has already attracted around 10 million subscribers as of August 2025.

Naver Cloud, the cloud services arm of South Korea’s leading internet company, has developed HyperCLOVA X, a model designed to connect legacy systems and improve usability. Its AI-powered services, such as CLOVA X and Cue, are already making an impact in areas like search, shopping, and finance. Naver Cloud emphasizes its unique position as one of the few companies globally with a full-stack AI ecosystem, from model development to cloud services and consumer applications.

Upstage, the only startup in the cohort, is focusing on creating specialized AI models for industries like finance, law, and medicine. Its Solar Pro 2 model, launched last July, was the first Korean model recognized as a frontier model by Artificial Analysis, putting it in the ring with OpenAI, Google, Meta, and Anthropic. With just 31 billion parameters, Solar Pro 2 outperforms global models on major Korean benchmarks, and Upstage aims to achieve a Korean language performance of 105% of the global standard.

The government plans to evaluate the progress of these companies every six months, potentially cutting underperformers and continuing to fund the top performers until only two remain to lead the country’s sovereign AI drive. This initiative reflects South Korea’s broader goal of securing national security, controlling data in the AI era, and fostering a robust domestic AI ecosystem.

By leveraging local data, infrastructure, and partnerships, South Korea is positioning itself as a formidable player in the global AI race, with the potential to challenge the dominance of global tech giants.