Naver, which has insisted on its 'my way' approach, is accelerating changes by expanding exchanges with the political and business circles and having its founder return to the front lines. Behind these changes is a sense of crisis stemming from concerns that it has 'fallen behind' global artificial intelligence (AI) companies like OpenAI and DeepSeek. Critics argue that this crisis arises from complacency in its domestic market position, causing it to miss the golden time for securing AI technology.
In particular, the composition of the board of directors, which has no AI experts, is seen as contradictory to Naver's goal of seeking to enter the global AI market. Industry insiders express concern that if Naver fails to launch a competitive AI model within this year, it may lag further in the global AI competition.
◇ Naver expands exchanges with political and business circles… securing support for 'regulatory easing'
The Federation of Korean Industries (FKI) held its regular general meeting on the 20th and approved the agenda for new membership for Naver. Naver had previously received a request to join FKI last year but declined. However, this time, it voluntarily submitted an application for membership in FKI.
On the 19th, a remarkable scene unfolded when more than 10 lawmakers from the National Assembly's Science, Technology, Information, Broadcasting, and Communications Committee visited Naver's headquarters. They released a joint statement, pledging not to spare policy support for Naver in hopes of making it leap to become one of the 'AI G3 (the three major global powers).' Naver CEO Choi Soo-yeon told the National Assembly members, "During the AI summit in Paris on the 11th, U.S. Vice President Kamala Harris publicly criticized regulations like the European Union's Digital Services Act as burdensome to American companies," and added, "I believe we are at a very urgent and critical time from a business perspective. I request continuous attention for the promotion of the AI industry rather than regulations targeting domestic corporations, so we can get ahead in global competition."
An industry insider remarked, "It seems that Naver, which has kept its distance from the business world and had no exchanges with the political sphere, has suddenly changed." They added, "With the founder Lee Hae-jin's upcoming return next month, it appears that Naver is seeking to secure support from both the political and business worlds to relieve regulations."
◇ With GPU shortages, reducing parameters is a stopgap... concerns grow that 'performance gaps will widen'
In 2021, Naver unveiled its 'HyperCLOVA,' the world's third-largest language model (LLM) AI model. In August 2023, it released an upgraded version called 'HyperCLOVA X.' However, it is being evaluated as significantly inferior in performance compared to global generative AI models such as ChatGPT, R1, and Gemini. The lack of advanced graphic processing units (GPUs) like NVIDIA's 'H100' has made it impossible to process vast parameters, hindering the enhancement of AI performance.
According to the industry, over 100,000 H100s are needed to achieve performance similar to ChatGPT, but only around 2,000 have been secured domestically. Recently, the Ministry of Science and ICT announced policies to secure over 10,000 H100s in the country this year, but this number is hopelessly insufficient to compete with OpenAI or DeepSeek.
To overcome these limitations, Naver has been updating HyperCLOVA X to reduce its dependency on H100s. The recently updated AI model's significant feature is that it has reduced the number of parameters to about 40% of what it was before. As a result, the data processing capacity has dramatically decreased, allowing for smooth operation without advanced GPUs like H100s. Operating expenses have been reduced by 50%, and both speed and performance have improved.
Naver stated, "As a result of a comprehensive performance comparison based on 19 benchmarks for the major training data, including Korean, English, coding, and mathematics, the average score across all fields outperformed the previous model," and added, "Notably, in the globally recognized benchmark 'MMLU (Massive Multitask Language Understanding),' we achieved an accuracy rate of 79.6%." The accuracy rate of the previous model, HyperCLOVA X, is known to be 67%.
However, there are concerns that by reducing the number of parameters, the gap in the enhancement of AI performance compared to global companies will widen. Lee Jong-ho, a former Minister and professor at Seoul National University's Department of Electrical and Computer Engineering, noted, "Naver's recent AI model update is the most realistic decision made to overcome the GPU shortage," but added, "However, by reducing the number of parameters, the gap in AI performance enhancement compared to OpenAI and DeepSeek will inevitably widen."
◇ “Naver's board of directors without AI experts poses strategic risks”
Lee Hae-jin, the former chairman and IT expert, is set to return to management next month, but the absence of AI experts on the Naver board of directors is expected to pose risks. Currently, among seven registered directors, there are no AI or technology experts. Although Lee's return is expected to make decision-making in the technology area easier, the lack of AI experts remains a noted weakness.
Professor Kim Jin-hwan of Stanford University's Graduate School of Business stated, "The absence of AI technology experts in Naver's board of directors poses a risk in terms of strategic leadership. Global competitors place AI researchers and engineers at the center of management decision-making," and advised, "If Naver aims to secure its AI competitiveness and hold a meaningful position in the global market, the role of AI and technology experts in the board must be strengthened." He continued, "Just as Naver missed opportunities in the past to respond to the cloud business, losing the Korean cloud market to global companies like Amazon Web Services (AWS), if it misses the golden time now, it may fail to compete effectively and lose the domestic market to foreign companies."
There is an expectation within and outside the industry that Naver needs to "show a significant move in the AI sector." Professor Jung Jang-seong of Chung-Ang University noted, "Naver recorded its highest ever revenue of 10 trillion won last year, and its market share in domestic search rose above 60% due to the aftermath of the martial law. However, if it fails to demonstrate differentiated technological capabilities compared to global competitors, its future will be uncertain."