LG, SKT, Upstage advance in Korea’s sovereign AI project; Naver, NC dropped in 1st round

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Three artificial intelligence developers — LG AI Research, SK Telecom and Upstage — have cleared the first cut in South Korea’s high-stakes push to build sovereign foundation AI models, advancing to the next stage of the government-led program, officials said Thursday.

According to the Ministry of Science and ICT, two of the five teams initially selected — Naver Cloud and NC AI — failed to advance past the first round, which assessed technical sophistication and model originality.

Launched as part of Seoul’s drive to secure AI sovereignty, the project aims to develop fully domestic foundation models trained from scratch. It is jointly overseen by the National IT Industry Promotion Agency and the Telecommunications Technology Association.

The evaluation was based on three criteria: benchmark testing (40 points), expert panel reviews (35 points) and user feedback (25 points). LG AI Research ranked first across all three categories, earning top marks for accuracy, usability and innovation. SK Telecom and Upstage also performed strongly, each scoring highest in select areas.

Naver Cloud, previously viewed as a front-runner, was eliminated over concerns of model originality and technical independence. The ICT Ministry said the company’s entry relied on fine-tuning existing overseas models — a practice that runs counter to the project’s core requirement to train models independently.

In particular, Naver Cloud’s attempt to develop its own vision encoder ran into trouble due to its use of pretrained prediction-making parameters from Alibaba’s Qwen 2.5-VL 32B, a Chinese-developed model.

According to the evaluation, the issue went beyond the use of external components. Officials said the encoder was adopted in a closed form that did not allow weight updates, raising red flags about whether the model could be considered proprietary.

Scores for NC AI were not disclosed.

To maintain a four-team competition structure, the ministry plans to hold an additional selection round. While NC AI and other qualified firms will be eligible to reapply, Naver Cloud has said it does not plan to participate in the next round. The team selected will receive access to high-performance computing resources and data sets as well as the official designation as a “K-AI” developer.

“There will be no disadvantages or shortened timelines for companies that join later,” the vice minister said. “Even if evaluations extend beyond the end of June, we plan to manage any gaps flexibly.”