Korea’s AI Transition: Caught in the innovation dilemma
In the global race for artificial intelligence (AI) supremacy, South Korea finds itself at a crossroads. While the nation has long been a powerhouse in conventional manufacturing industries like semiconductors and automobiles, its progress in AI has been less stellar. According to the Boston Consulting Group’s AI Maturity Matrix, korea is classified as a “stable competitive country,” placing it in the second tier globally. This is a far cry from the “AI leading countries” like the United States, China, Canada, Singapore, and the UK.
The numbers tell a stark story. Korea possesses just 2,000 NVIDIA H100 GPUs, the critical hardware for AI learning and reasoning, compared to Tesla’s 35,000 and XAI’s 100,000.Yoo young-sang, CEO of SK Telecom, lamented at the SK AI Summit, “Korea has only 2,000 H100 GPUs throughout the whole.” This hardware gap underscores a broader issue: Korea’s struggle to keep pace in the AI arms race.
The Middle-Income Trap and AI
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Korea’s challenges are emblematic of what economists call the “middle-income trap.” While the nation successfully transitioned from a developing to a high-income economy in the 1960s, its growth model is now showing cracks. The World Bank notes that only three countries—Korea, Ireland, and Taiwan—have escaped this trap. Though, in the AI era, Korea’s reliance on export-oriented growth and continuous innovation is no longer sufficient.
Clayton Christensen, a Harvard Business School professor, distinguishes between “continuous innovation,” which improves existing products, and “destructive innovation,” which creates entirely new markets. Korea excels in the former but lags in the latter. As an example, while Korea ranks fourth in the UNIDO Manufacturing Competitiveness Index, its OECD-based labor productivity stands at a dismal 33rd out of 38 countries.
China’s AI Dominance
China, once considered a step behind Korea in traditional manufacturing, has surged ahead in AI. with 4,300 AI companies, an industrial size of 500 billion yuan (approximately 100 trillion won), and second-place ranking in patent applications, China is now a global AI powerhouse. Ha Jung-woo,head of the NAVER Cloud AI Innovation Center,starkly summarized the gap: “If you score 100 points,China will be in the early 50s and 30 points in Korea.”
China’s success is driven by “destructive innovation.” Companies like Huawei, Tencent, and BYD are leveraging AI for smart manufacturing, cloud computing, and autonomous vehicles, backed by massive government subsidies. This contrasts sharply with Korea’s focus on incremental improvements in existing industries.
Lessons from France
France offers a compelling case study in AI change.With President Emmanuel macron’s full support, the country jumped from 13th to 5th in global AI rankings within a year. mistral AI, a french startup, is developing open-source large language models (LLMs) that rival those of the US and China. This rapid ascent highlights the importance of government backing and a focus on disruptive technologies.
The Path Forward for Korea
To bridge the gap, Korea must rethink its approach. experts advocate for expanded government support for AI startups,the progress of AI optimization technologies to reduce GPU dependence,and stronger research initiatives to retain AI talent. As one IT industry official noted, “It is indeed very arduous to follow at the individual company level.”
| Key Metrics | Korea | China | France |
|——————|———–|———–|————|
| AI Maturity | Stable Competitive | Leading | Leading |
| GPU Units (H100) | 2,000 | 350,000 | N/A |
| AI Companies | N/A | 4,300 | N/A |
| Global Ranking | 35th | 2nd | 5th |
Korea’s AI journey is far from over. By embracing destructive innovation and fostering a supportive ecosystem, the nation can reclaim its position as a global leader. The question is whether it can act swiftly enough to avoid being left behind in the AI revolution.
Korea’s AI Transition: Insights from an Expert on Innovation and Global Competition
In the global race for artificial intelligence (AI) supremacy, South Korea finds itself at a crossroads. While the nation has long been a powerhouse in conventional industries like semiconductors and automobiles, its progress in AI has been less stellar. To understand the challenges and opportunities Korea faces in reclaiming its leadership in the AI revolution, we sat down with dr. Min-woo Kim, a renowned expert in AI and global innovation strategies. In this interview, we explore the nuances of KoreaS AI journey, the lessons from China and France, and the path forward.
Korea’s Current AI Landscape: The Challenges and Opportunities
Senior Editor: Dr. Kim, let’s start with an overview of Korea’s AI landscape. According to recent data, Korea is classified as “stable competitive” in AI maturity, lagging behind global leaders like the US and China. What are the key factors holding Korea back?
Dr. Min-woo Kim: Korea’s AI challenges are multifaceted. While the country has a strong foundation in conventional industries,its transition to AI-driven innovation has been slower than expected.One major issue is the lack of critical hardware, such as GPUs, which are essential for AI development. Korea has just 2,000 H100 GPUs, a fraction of what global leaders like Tesla or XAI possess. This hardware gap limits the scalability of AI projects and hinders research and development. Additionally, Korea’s focus on continuous innovation—improving existing products—has come at the expense of disruptive innovations that create entirely new markets.
The Middle-Income Trap and Its Impact on AI Growth
Senior Editor: You’ve mentioned the concept of the “middle-income trap.” How does this phenomenon apply to Korea’s AI journey?
Dr. Min-woo Kim: The middle-income trap is a phenomenon where a country achieves rapid economic growth but then stagnates as it struggles to transition to high-income status. Korea has successfully navigated this trap in the past, but the AI era presents new challenges.The country’s reliance on export-oriented growth and incremental innovation is no longer sufficient. To escape this trap, Korea needs to embrace “destructive innovation”—creating new markets and industries rather than simply improving existing ones. This requires a shift in mindset, increased government support, and a focus on long-term investments in AI research and talent.
China’s AI Dominance: Lessons and Warnings
Senior Editor: China has emerged as a global AI powerhouse, with 4,300 AI companies and massive government backing. What can Korea learn from China’s success?
Dr. Min-woo Kim: China’s rise in AI is a testament to the power of destructive innovation and strong government support. Companies like Huawei, tencent, and BYD are leveraging AI for smart manufacturing, cloud computing, and autonomous vehicles, backed by significant subsidies and a clear national strategy. Korea,on the other hand,has focused on incremental improvements in existing industries,which limits its ability to compete globally. To catch up, Korea needs to adopt a similar approach—fostering disruptive technologies, encouraging startups, and providing robust government support. the key is to create an ecosystem where innovation thrives.
France’s Rapid Ascent: A Blueprint for Korea?
Senior Editor: France has made remarkable strides in AI, jumping from 13th to 5th in global rankings within a year. What lessons can Korea draw from France’s experience?
Dr. Min-woo Kim: France’s success is a great case study for Korea. President Macron’s strong support for AI, combined with a focus on open-source technologies and disruptive innovation, has propelled France to the forefront of the global AI race. startups like Mistral AI are developing large language models that rival those of the US and China. For Korea, the lesson is clear: government backing and a focus on cutting-edge technologies are essential. By fostering a supportive ecosystem and prioritizing disruptive innovation, Korea can accelerate its AI journey and reclaim its position as a global leader.
The Path Forward: Bridging the AI Gap
Senior Editor: what steps should korea take to bridge the AI gap and avoid being left behind in the AI revolution?
dr. Min-woo Kim: Korea needs a multi-pronged approach to succeed in the AI race. First, the government must expand its support for AI startups and research initiatives.Second,korea should invest in AI optimization technologies to reduce its dependence on GPUs. Third, retaining and attracting top AI talent is crucial. The nation must create an surroundings that encourages innovation and rewards risk-taking. As one IT industry official aptly noted, the challenge is immense at the individual company level, but with a coordinated effort, Korea can turn the tide. The key is to act swiftly and decisively.
Conclusion: A Call to Action
In this in-depth interview, Dr.Min-woo Kim has outlined the challenges and opportunities facing Korea in the global AI race. from addressing the middle-income trap to learning from China and France, Korea has a clear path forward. By embracing destructive innovation, fostering a supportive ecosystem, and prioritizing long-term investments, the nation can reclaim its position as a global leader in AI. The question now is whether Korea can act quickly enough to avoid being left behind in this transformative revolution.
