South Korea's Sovereign AI Contest Eliminates Naver and NCSoft Subsidiaries

The government-sponsored competition designed to foster South Korea's indigenous Artificial Intelligence (AI) foundation models, sometimes referred to as the 'AI Squid Game,' reached a significant evaluation stage on Thursday, January 15, 2026. Overseen by the Ministry of Science and ICT (MSIT), the rigorous tournament, which began in August 2025, resulted in the simultaneous disqualification of two of its five finalists: subsidiaries of Naver Corp. and NCSoft Corp. This mid-stage review reduced the field to three primary contenders: LG AI Research, SK Group (through SK Telecom), and the startup Upstage, reflecting a strict application of the program's criteria for technological independence and performance.

The reasons for the dual elimination were distinct, underscoring the project's multifaceted standards for an 'Independent AI Foundation Model.' Naver Cloud's unit was removed after its submitted model was found to partially rely on an existing Chinese model, with its vision encoder matching Alibaba's Qwen system by over 99% in weight analysis, a direct violation of the mandate for technological self-reliance. In contrast, NCSoft Corp.'s AI subsidiary, notably the only team in this phase led by a woman, was dismissed based on comprehensive performance evaluations, failing to meet the required benchmarks set by technical experts and user assessments.

LG AI Research secured the highest overall score in this initial assessment phase, leading across the technical benchmark testing (weighted at 40 points), expert panel review (35 points), and user feedback (25 points). Lim Woo-hyung, cohead of LG AI Research, stated the strategic objective extends beyond mere competitiveness to "lead the creation of a comprehensive AI ecosystem, including industrial deployment and talent development." Meanwhile, SK Telecom’s consortium advanced with its A.X K1 model, a 519 billion parameter system using a Mixture-of-Experts architecture, which achieved a score of 89.8 on the AIME25 math benchmark, outperforming the 685B model 'DeepSeek-V3.1.' Upstage also progressed with its Solar Open 100B model, recognized for its technological efficiency.

This national strategy, championed under President Lee Jae-myung, seeks to establish South Korea as one of the world's top three AI powers by developing indigenous open-source models capable of competing with global leaders. The government has committed substantial funding, including KRW 1.9 trillion for securing 10,000 graphics processing units (GPUs) and KRW 213.6 billion for large language model projects. Following these eliminations, the MSIT plans an additional selection round in the first half of 2026 to bring the field back to four elite teams, with final winners anticipated in early 2027. The debate surrounding 'homegrown' technology, intensified by Naver's disqualification, continues to define compliance standards for data lineage within the national AI ecosystem.