During his campaign, South Korean President Lee Jae-myung pledged 100 trillion Korean won (about A$112 billion) over a five-year period to turn the country into one of the top three AI powers in the world. However, faced with practical barriers such as funding constraints and talent shortages, Lee’s administration may fall short of its AI aspirations.

South Korea’s transformation into a global AI powerhouse is a signature policy of Lee’s administration thus far. The policy focuses on developing the country’s AI capabilities, including a Korean-language large language model (LLM), by leveraging the expertise of five South Korean corporations, which are yet to be selected by the government.

Lee’s AI push serves a dual purpose. First, in response to domestic economic woes, the government seeks to boost the country’s tech industry and accordingly consolidate global exports of AI technologies. Lee’s policy will build on the international efforts of South Korean tech companies such as KT and Naver, which are currently developing LLMs tailored to the cultural and linguistic nuances of the Thai and Saudi Arabian markets respectively.

Second, the government aims to develop the country’s resilience in the Indo-Pacific’s deteriorating strategic environment. Seoul and other regional administrations see technological innovation as a key mechanism to build security against grey zone warfare and regional adversaries’ cutting-edge defence capabilities. Such threats are front of mind for Seoul: with North Korea on its doorstep, South Korea faces Pyongyang’s missile tests and frequent cyberattacks from state-backed groups such as Lazarus.

Many countries—particularly those affected by the United States’ increasingly protectionist stance—are opting to develop independent technology capabilities. AI has been a focus of these efforts, especially due to its role in improving the effectiveness of information operations and military capabilities.

The development of domestic LLMs has become a key AI priority for many Indo-Pacific countries, led by the US through OpenAI, and China through DeepSeek. Data from ASPI’s Critical Tech Tracker shows that these two countries lead high-impact research in all AI-related technology categories. Other regional players have followed suit. India, which ranks third in high-impact research for all AI-related technologies, last year debuted its own LLM, BharatGPT.

Although not as highly ranked in the Critical Tech Tracker, Singapore and Taiwan also rank among the top 10 for high-impact research in various AI technologies. These two countries have recently bridged the gap between research and commercialisation through the launch of generative AI models Sea-Lion and TAIDE, respectively.

South Korea lags on AI when compared with the US, China and India. The Critical Tech Tracker ranks it between fourth and 11th place in AI-related technologies. To bolster its efforts to commercialise domestic AI technologies including an LLM, Seoul needs to improve its domestic research and development.

To close this innovation gap, Lee appointed the head of Naver’s AI Innovation Centre, Ha Jung-woo, as the country’s first-ever senior presidential secretary for AI. He has also placed the chief of LG’s AI Research division, Bae Kyung-hoon, in the role of science minister.

The expansion of domestic AI infrastructure is another of Lee’s aspirations. One flagship initiative is SK Group and Amazon Web Services’ joint AI data centre, a planned gigawatt-scale facility that will eventually become Korea’s largest AI data centre, housing 60,000 GPUs. Lee spoke at the centre’s launch ceremony, stating that this centre was a ‘powerful first step towards the Republic of Korea becoming an AI hub in the Asia-Pacific region’.

Building the country’s AI talent pool through the education sector is another priority for Lee. The government plans to introduce mandatory AI subjects at all schooling levels, which will involve teaching students about programming, basic AI principles, and AI use and ethics.

South Korea’s AI transformation will not be without its challenges. Funding is a key constraint, with uncertainties emerging about the source of Lee’s pledged 100 trillion won investment. Talent recruitment is another issue, despite South Korea being a leading producer of educated professionals in AI and science. Among OECD countries, the country ranked fourth-last in its ability to domestically retain AI expertise—many professionals seek opportunities in Japan, North America and Europe.

Lee Jae-myung is right to prioritise AI as a key driver for South Korea’s ongoing economic and regional security. His appointment of key AI government officials and support of private sector initiatives indicate that this policy is not an empty promise. But without clear funding sources and improved talent retention, Lee’s AI ambitions risk becoming another cautionary tale of top-down tech boosterism.