South Korea’s Bold AI Strategy: Paving the Path to Tech Leadership

SEOUL, January 22, 2025 – South Korea has been witnessing an extraordinary surge of dynamism since the end of last year. In a historic moment in December 2024, renowned South Korean author Han Kang was awarded the Nobel Prize in Literature, marking the first time a South Korean has received this prestigious honor. Concurrently, the song by ROSÉ from BLACKPINK and Bruno Mars dominated global pop charts. The sequel to the popular Netflix series, , surpassed its predecessor’s popularity. However, the country also faced political upheaval with the imposition of emergency martial law in early December. Economically, the outlook for South Korea this year appears gloomy. The foreign capital market is showing signs of instability, and the stock market is in a weak state.

Strengthening Industrial Competitiveness through Investments and Innovations

In the face of current economic conditions, South Korean companies are bolstering their competitiveness through increased investments in new technologies and strategic innovation.

Hyundai Motor Group is implementing the largest domestic investment in its history this year to strengthen future competitiveness. The investment, a massive KRW 24.3 trillion, marks a 19% increase from last year’s investment of KRW 20.4 trillion, setting a new annual record. The investment breakdown includes KRW 11.5 trillion for R&D, KRW 12 trillion for capital expenditure, and KRW 800 billion for strategic investment. R&D investments will be allocated towards improving product competitiveness, advancing electrification, developing software-defined vehicles (SDVs), and creating hydrogen products and core technologies to secure future capabilities. (Related content – Hyundai Motor Group Newsroom) (Reference article)

Meanwhile, Korea’s leading companies showcased their artificial intelligence (AI) technology innovations at CES 2025 in Las Vegas, announcing plans to introduce AI-related products and services while strengthening their AI competitiveness.

South Korean Companies Highlight AI Investments, Yet Remain Less Competitive

According to the AI report released by a global management consulting firm in November 2024, South Korea placed in the second group as an ‘AI steady contender.’ In the report, the firm describes ‘Steady contenders’ as economies with relatively high exposure to AI and sufficient levels of readiness for its adoption.

AI experts suggest that substantial investments and national-level support are crucial for South Korea to lead the ranks of advanced AI nations. In response, the South Korean government and the National Assembly undertook legislative measures last year. Consequently, in December, the ‘Framework Act on AI,’ which will serve as a blueprint for South Korea’s AI industry, was passed in the National Assembly’s plenary session. The Framework Act on AI includes provisions for establishing basic AI plans, formulating AI ethics guidelines, and setting standards to ensure the reliability of AI technology, with evaluation results to be reflected in policies. As a result of this legislation, significant national-level investments and support in the AI field are anticipated this year.

Developing Proprietary AI Products and Enhancing Versatility

While establishing legal frameworks lays the groundwork, the key to success in the AI business lies in the development of globally competitive AI products. Specifically, it’s crucial to create general-purpose AI models that can be used not only domestically but also globally. Aligning AI product development with global market standards is imperative.

In August of last year, South Korea’s Software Policy & Research Institute published a report titled ‘An Analysis on the Global Large-scale AI Model (2020-2023).’ The report revealed that most AI models developed by South Korean companies are designed for domestic services or to be integrated into their own products.

Among the AI platforms developed by South Korean companies, Hyundai Card’s ‘UNIVERSE’ stands out as a notable example of a platform with international usage. Hyundai Card, South Korea’s leading credit card company, has invested an unprecedented KRW 1 trillion over the past decade to enhance its in-house data science capabilities. The hyper-personalized AI platform, UNIVERSE, uses a ‘Tag’ system to define and structure data, enabling the prediction of individual behaviors, preferences, and conditions. The platform can be applied across all business areas, regardless of industry. In October 2024, Hyundai Card signed a contract with Sumitomo Mitsui Card Company (SMCC), one of Japan’s big three credit card companies. The platform is also gaining significant attention in Asia Pacific, Middle East, Europe and North America.

A representative from Hyundai Card commented, “While various companies are developing AI products and accumulating technology, achieving success in actual business is a highly challenging process. The key lies in building proprietary data science capabilities while simultaneously developing a versatile AI platform for entry into global markets. Long-term investments are required to support these efforts.”