Korea splits AI push into two tracks amid confusion over sovereign model project

Korea will keep its government-run competition to build homegrown AI models and run it alongside a separate program to develop cutting-edge "frontier" AI, the Ministry of Science and ICT said on Friday, after confusion over whether the competition would be scrapped.

"We are redesigning the Sovereign AI Foundation Model Project into a frontier model development track and an industrial deployment track," Second Vice Science Minister Ryu Je-myung said at the briefing. "We are also considering ways to give incentives to the two companies that are finally selected."

The Sovereign AI Foundation Model Project is a government-run competition, launched in June 2025, in which Korean companies race to build homegrown large AI models. The goal is models that match about 95 percent of the performance of the world's top systems. Teams are cut in elimination rounds, and the winners get government-owned GPUs and other support. The project has gone through three rounds of selection so far, leaving three teams — SK Telecom, LG AI Research Institute and Upstage — competing for the final two spots.

The ministry said it will open applications for the new frontier AI program as soon as its budget is finalized at the end of the year, after the National Assembly's review. Development could begin as early as February, when the final teams for the sovereign AI project are decided.

Deputy Prime Minister and Minister of Science and ICT Bae Kyung-hoon first floated the frontier AI plan at a press conference in July. "We are planning to develop a frontier-class model with an investment of more than 3.5 trillion won [$2.6 billion]," he said at the time, adding that it would be pursued separately from the sovereign AI project.

In August, when it announced the results of the project's second-stage evaluation, the ministry said it would carry out a "complete overhaul." The plan took concrete shape when the government's budget proposal for next year allocated 4.7 trillion won under the frontier AI model program, not the sovereign AI project.

Critics questioned how the frontier AI program would differ from the existing project, since the sovereign AI project already aimed for 95 percent of the performance of the latest frontier models. Many in the industry also criticized the government's attempt to pick AI models through competitive rounds as a failure.

"Since Mythos in April, the pace of model performance improvement has risen exponentially, and the gap has widened," Ryu said. "We had to consider whether to maintain [the original target] or whether some new response was needed." In May and June, the ministry discussed whether the current approach was sufficient with about 10 experts from major AI companies. They reportedly reached a consensus that a new kind of investment, on an entirely different scale from the existing project, was needed.

Asked whether the government had designed the project poorly, Ryu said the state of AI development "was very difficult to predict." "What expert could have predicted a situation like this year's?" he asked. He added that a year ago Korea was severely short of GPUs and few companies were trying to build their own AI models. The competition, he said, helped a Korean model reach third place globally on Artificial Analysis rankings.

Responding to criticism that participating companies were increasingly confused, Ryu said, "The application guidelines already stated that 'support and its scale can be adjusted, and may be suspended, depending on the government's budget situation.'"

The debate over the government's AI plans is expected to continue during the National Assembly's budget review. Of the 4.7 trillion won allocated to the frontier AI program, 3.85 trillion won is for expanding GPU capacity, but no specific plan has been set for how the GPUs will be distributed.

"The government says it will pursue [the sovereign AI project and the frontier AI program] separately, but it submitted a plan to the National Assembly that combines them," Rep. Kim Sun-min of the Rebuilding Korea Party, a member of the National Assembly's Science, ICT, Broadcasting, and Communications Committee, said on the same day.

"We did not allocate a separate GPU budget for the Sovereign AI Foundation Model Project this year," the ministry said. "Personnel costs [for the Sovereign AI Foundation Model Project] are reflected in next year's budget proposal."

BY CHANG YOON-SEO [[email protected]]