How South Korea Plans to Best OpenAI, Google, and Others with Homegrown AI

From tech giants to emerging startups, South Korean companies are developing large language models tailored to their own language and culture, aiming to compete directly with global leaders like OpenAI and Google.

Last month, the country announced its most ambitious sovereign AI program yet, committing ₩530 billion (about $390 million) to five local firms building foundational large-scale models.

This move reflects Seoul's intention to reduce dependence on foreign AI, strengthen national security, and maintain tighter control over data in the AI era.

The Ministry of Science and ICT selected five organisations to lead the initiative: LG AI Research, SK Telecom, Naver Cloud, NC AI, and the startup Upstage. Every six months, their progress will be reviewed, with underperformers cut and funding redirected to frontrunners, until only two remain to spearhead South Korea's sovereign AI mission.

LG AI Research: Exaone 4.0

LG AI Research, part of the LG Group, has developed Exaone 4.0, a hybrid reasoning model combining broad language capabilities with advanced reasoning from its earlier Exaone Deep version.

Exaone 4.0 (32B) already ranks well on Artificial Analysis's Intelligence Index, alongside Upstage's Solar Pro 2. Still, LG plans to climb higher by leveraging access to real-world industry data — from biotech to manufacturing. The focus is not just on scale, but on refining data to ensure AI delivers practical value beyond general-purpose models.

LG is also improving models by offering APIs, then feeding usage data back into training cycles. Rather than pursuing massive GPU clusters, LG emphasises efficiency, getting the most out of available hardware, and tailoring models to specific industries.

SK Telecom: A.X

Telecom giant SK Telecom (SKT) introduced its AI service A. (A-dot) In 2023, it recently rolled out its new large language model, A.X 4.0, based on Alibaba Cloud's Qwen 2.5.

Available in both 72B and 7B versions, A.X processes Korean inputs approximately 33% more efficiently than GPT-4, highlighting its local advantage. SKT also open-sourced A.X. 3.1 models earlier this year. It's a service featuring AI call summaries and auto-generated notes, already counting 10 million subscribers as of August 2025.

With access to telecom data — from navigation to mobility — SKT positions itself as a bridge between research and real-world application. It is also building AI infrastructure, including GPUaaS services, a hyperscale AI data centre with AWS, partnerships with Korean AI chipmaker Rebellions, and global collaborations such as MIT's MGAIC project.

Naver Cloud: HyperCLOVA X

Naver Cloud, the cloud arm of South Korea's largest internet company, first launched HyperClova in 2021 and later upgraded it to HyperCLOVA X, which powers products such as CLOVA X (a chatbot) and Cue (an AI-driven search engine). This year, Naver also unveiled its multimodal reasoning model, HyperCLOVA X Think.

Naver describes its LLMs as "connectors" that bridge legacy systems and services, making them more useful. Unlike most competitors, Naver operates an actual "AI full stack," building its own model, managing massive data centres, and integrating AI into search, shopping, maps, finance, and more.

With consumer-focused products such as AI Shopping Guide, CLOVA Studio for businesses, and CLOVA Carecall for senior citizens, Naver's advantage lies in its rich, real-world data. The company stresses that quality and sophistication, not just scale, will determine its success against global players.

Upstage: Solar Pro 2

Among the chosen firms, Upstage is the only startup. Its Solar Pro 2 model, launched in July 2024, was the first Korean LLM recognised as a frontier model by Artificial Analysis — placing it in the same category as OpenAI, Google, and Anthropic.

Despite having just 31 billion parameters (compared to 100B–200B for typical frontier models), Solar Pro 2 performs exceptionally well on Korean benchmarks while being more cost-efficient.

Upstage aims for its AI to achieve 105% of the global standard in Korean language performance, with a focus on industries such as finance, law, and healthcare. Its mission is to drive a Korean AI ecosystem where AI-native startups lead innovation.

The Bigger Picture

South Korea's sovereign AI initiative is more than just a technology race — it's about national independence, data security, and global competitiveness. With LG, SK Telecom, Naver Cloud, and Upstage leading the way, the country is betting on efficiency, specialisation, and cultural alignment to challenge global AI giants on their own turf.