Geo Focus: Asia , Geo-Specific , Government

South Korea Invests in AI R&D to Compete Globally

Government Trying to Counter Headwinds of Slow Growth and Dwindling Talent Pool
South Korea Invests in AI R&D to Compete Globally
The skyline of Busan in South Korea, an emerging hub of technology startups (Image: Shutterstock)

The South Korean government is investing $585 million in domestic AI research and development in 2024, but spending cuts, a shrinking technology workforce and growing competition with other APAC countries pose challenges to the government's goal of "global technology domination."

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The Ministry of Science and ICT said the Critical and Emerging Technologies funding will help businesses to develop next-generation core technologies and strengthen industrial competitiveness.

"Investment in CETs is not an option, but a must to create growth drivers through world-class research," said Joo Young-Chang, vice minister for science, technology and innovation.

The government also promised funding for a technical, institutional and industrial foundation for a local hyperscale AI industry that will be globally competitive.

Domestically developed hyperscale AI technologies, such as large language models, are expected to boost productivity in areas such as healthcare, law, Korean language training, academia and research. "Korea is one of four countries in the world with a hyperscale AI model. We aim to create services that will lead the global market by targeting Korea's specialized fields such as law and medicine," Science and ICT Minister Lee Jong-ho said.

The government fears the South Korean tech industry is lagging behind its competitors in the U.S. and China. A report from CB Insights on the top 12 AI-related equity deals in Asia in Q4 2023 shows only one South Korean AI startup on the list.

CB Insights found that South Korea did not have a single billion-dollar AI startup in the beginning of 2023. By that time, the U.S. had 53 and China had 19.

South Korea's planned dominance in AI-related technologies is also being hindered by slow economic growth and reduced capital investments. In its 2024 budget, the government cut its research and development spending by 14.7% - its first R&D budget cut in 33 years - but stressed that it will continue to support "super gap" and critical and emerging technologies.

"Although the current financial conditions are not very favorable due to internal and external uncertainties, we will continue our efforts to expand investment in CETs to address the global competition for technological dominance and using S&T policies as security assets," said Joo. The government's AI budget for 2024 rose from KRW 705.1 billion in 2023 to KRW 777.2 billion in 2024 - a 10% increase.

Another challenge facing South Korea is hiring enough skilled AI practitioners to sustain its development efforts. The country's population is declining steadily. The number of school-age 18-year-olds in the country fell from 706,000 in 2011 to 443,000 in 2023.

Element AI's Global AI Talent Report 2020 says the number of AI experts in South Korea is 2,551, far fewer than the 188,300 in the U.S., 76,213 in India and 22,191 in neighboring China. According to a recent AWS survey, 88% of South Korean employers are struggling to find candidates who are proficient in AI, and they are willing to pay 18% more to candidates who possess the right skills to run AI projects and tools.

Employers in India, Thailand and Malaysia are willing to offer a pay raise of more than 40% to workers who have AI skills, making it difficult for South Korean businesses to attract workers from abroad, the report says.

Despite the dwindling tech workforce and financial headwinds, the government hopes to fine-tune core technology spending and invest in the strongest homegrown tech startups to reach its goal of global leadership.

The Super Gap Startup 1000+ Project, launched in May 2023 by the Ministry of SMEs and Startups, is focusing on finding the right investments. The ministry said it will "select 150 super gap deep-tech startups with unrivaled technologies based on evaluations by top-level experts from academia, industry and fields of investment at home and abroad." Each selected startup will receive about $800,000 in funding from the government.

The government's long-term goals include introducing university programs centered on hyperscale AI projects; offering enhanced AI training for software developers, teachers and students to broaden the talent pool; and implementing hyperscale AI-related public initiatives.

About the Author

Jayant Chakravarti

Jayant Chakravarti

Senior Editor, APAC

Chakravarti covers cybersecurity developments in the Asia-Pacific region. He has been writing about technology since 2014, including for Ziff Davis.

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