South Korea’s government initiated a ₩530 billion sovereign AI program, selecting five local companies to develop foundational models. The project aims to reduce foreign AI dependency and enhance data control through a competitive, multi-stage funding process.
The Ministry of Science and ICT has pledged approximately $390 million to the initiative, selecting LG AI Research, SK Telecom, Naver Cloud, NC AI, and the startup Upstage. The program is designed to foster competition, with progress reviews scheduled every six months. During these evaluations, underperforming companies will be removed from the program while funding continues for the frontrunners. This elimination process will persist until two companies remain to lead the nation’s sovereign AI development.
LG AI Research, the research and development division of the LG Group, is contributing its Exaone 4.0 model. Described as a hybrid reasoning AI, its architecture merges broad language processing with advanced reasoning features. These reasoning functionalities were first introduced in LG’s preceding model, Exaone Deep, indicating an iterative development approach for the technology.
Telecommunications firm SK Telecom launched its personal AI agent, “A.”, in late 2023 before rolling out its new large language model, A.X, in July 2024. The A.X 4.0 model is built on Alibaba Cloud’s Qwen 2.5 architecture and is offered in two versions: a comprehensive 72-billion-parameter model and a lighter 7-billion-parameter alternative. The company states A.X 4.0 processes Korean-language inputs with 33 percent greater efficiency compared to GPT-4o. As of August 2025, the A.X service has registered about 10 million subscribers.
Naver Cloud, the cloud services division for internet company Naver, introduced its HyperCLOVA X model in 2023 as an advancement of its earlier HyperCLOVA. The company also unveiled HyperCLOVE X Think, a model for multimodal reasoning. Naver Cloud positions its large language models as “connectors” to integrate with legacy systems and bridge siloed services. Its strategy involves embedding AI technology into core services like search, shopping, maps, and financial platforms.
Upstage is the sole startup selected for the initiative. Its Solar Pro 2 model, launched in July 2024, became the first Korean model recognized as a frontier model by Artificial Analysis. The model has 31 billion parameters and is presented as more cost-effective and better performing for South Korean users. Upstage’s strategy focuses on business impact through the development of specialized models for industries such as finance, law, and medicine. The company also aims to foster a domestic AI ecosystem led by AI-native startups.
NC AI, the fifth company selected for the national project, declined to comment on its specific plans or contributions to the initiative.
