Korea’s future hinges on national AI transition over next 5 years

AI is no longer just a technology. It is a force that increasingly governs every sector — industry, the economy, culture and national defense. If we fall behind, we risk becoming an AI backwater.

Lee Kwang-hyung

The author is the president of KAIST and co-chair of the Presidential Council on Intellectual Property.

Korea faces three fundamental challenges today. First, its manufacturing competitiveness is weakening. As a nation built on manufacturing, Korea is now under increasing pressure from China. While China's rapid technological progress is striking, its aggressive low-wage strategy poses an even greater threat.

Second, Korea is confronting a sharp demographic decline. A falling birthrate is pushing the country toward a super-aged society, shrinking the working population while increasing the dependent population. Third, unemployment remains a major issue. Youth unemployment alone affects roughly 260,000 people, and this figure could worsen as manufacturing weakens further. A high jobless rate, in turn, raises the risk of crime and social instability.

President Lee Jae Myung participates in a commemorative ceremony with attendees at the launch event for the Ulsan AI Data Center, part of the “Korea AI Expressway” initiative, held at the Ulsan Exhibition and Convention Center on June 20. From left: Industry Minister Ahn Duk-geun, National Assembly Science, ICT, Broadcasting and Communications Committee Chair Choi Min-hee, SK Group Chairman Chey Tae-won, President Lee, Prasad Kalyanaraman, Vice President of Infrastructure at Amazon Web Services (AWS), Science and ICT Minister Yoo Sang-im, and Ulsan Mayor Kim Doo-gyeom. [JOINT PRESS CORPS]

In this context, President Lee Jae Myung’s administration has pledged to transform the country into an artificial intelligence powerhouse. The government plans to invest 100 trillion won ($73 billion) to convert Korea into a fully AI-integrated nation and elevate it into the ranks of the world’s top three AI leaders. It is a timely and sound strategy, particularly as Korea has yet to assert a visible presence in the global AI race. This may well be our final opportunity.

AI is no longer just a technology. It is a force that increasingly governs every sector — industry, the economy, culture and national defense. Korea’s competitors are rapidly applying AI to boost industrial productivity. If we fall behind, we risk becoming an AI backwater.

A similar shift occurred three decades ago during the global digital revolution. At that time, the administration of President Kim Dae-jung embraced the slogan, “Though we lag in industrialization, we’ll lead in informatization.” Amid the 1997 IMF crisis, the government distributed affordable computers to schools and connected the country with a nationwide high-speed internet network. These efforts made Korea a digital leader, while countries like Japan, the U.K., France and Germany failed to fully transition.

This illustration photograph shows screens displaying the logo of DeepSeek, a Chinese AI company that develops open-source large language models, and the logo of OpenAI's artificial intelligence chatbot ChatGPT on Jan. 29. [AP/YONHAP]

The same pattern may repeat with AI. If Korea adapts well, it will become an “AI sovereign.” If not, it could become an AI colony. For years, debate persisted over whether Korea should develop its own AI models or rely on foreign ones to drive business applications. The new government has resolved this with a clear decision to pursue sovereign AI. This means building homegrown models and fostering business ecosystems around them. It is a wise move.

Some applications can safely rely on foreign AI, but others — particularly defense and education — must remain domestic. In future warfare, AI will likely command operations. That role cannot be outsourced. Similarly, AI will increasingly serve as both textbook and teacher. If foreign AI systems are used in education, they will shape students' thinking in foreign frameworks, even if the students appear Korean on the outside.

In response to the government’s AI strategy, Korean universities must act on three fronts.

First, they must dramatically expand AI talent development. The scale of training needs to more than double. The United States and China, both AI powerhouses, produce significantly more AI researchers than Korea. China alone produces 3.5 million STEM graduates each year, many of them AI specialists. From elementary school onward, China runs advanced math programs to identify and train AI talent. As AI is fundamentally built on math, Korea must also expand its gifted education programs.

Universities should double AI undergraduate and graduate admissions and place greater emphasis on applied AI. To revive Korea’s manufacturing sector, students must be taught how to apply AI directly to production environments. All students should receive basic AI training, along with practical exposure to processes in mechanical, chemical, electronic and bioengineering.

Second, universities should establish AI research centers dedicated to solving manufacturing challenges. These centers would identify areas where AI can improve efficiency and develop practical solutions in collaboration with industry. Companies interested in AI adoption should form consortia with universities. Graduation requirements in AI programs could be redesigned so that students spend their final year working full-time at a company to solve real-world problems, replacing traditional theses. Over time, this would lead to widespread AI adoption in factories and bolster Korea’s global competitiveness.

Third, Korea must invest in an AI startup ecosystem. Universities should host AI startup support centers to help students and faculty launch companies. Commercializing research creates jobs, generates wealth and drives innovation. A strong base of AI firms is essential to building an AI ecosystem.

Korea’s successful digital transformation 25 years ago offers a useful precedent. Back then, the government distributed 30 to 40 million won to software companies to build internet applications. Most failed, but a few survived and helped shape today’s internet ecosystem.

The same approach could work for AI. Each year, the government could select 2,000 AI application developers and grant each 50 million won. The total annual cost would be 100 billion won. If even 10 percent of these startups survive, Korea would have 200 viable AI companies each year. Over five years, 1,000 AI firms would form the backbone of a new national AI ecosystem.

A demonstration of an AI digital textbook (AIDT) math class for third-grade elementary students takes place at Kintex in Ilsan, Gyeonggi, in December 2024. [JOONGANG ILBO]

I believe the next five years will be decisive for Korea’s future. A successful AI transition will restore productivity in manufacturing, strengthen global competitiveness and create new jobs not only in industry but also in service and health care sectors.

While population decline remains a serious issue, widespread AI adoption may reduce labor demand, which could balance the shrinking work force. In the end, becoming an AI leader may help Korea address its manufacturing challenges, reduce unemployment and soften the impact of demographic decline.

Universities will play a key role in this effort — and that makes me hopeful.

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.