The government’s national AI (artificial intelligence) computing infrastructure project was unsuccessful in bidding due to a lack of participating corporations. Initially, over 100 corporations expressed interest by submitting letters of intent to participate, but as the bidding conditions included a requirement for government equity to exceed 50%, concerns over management autonomy led corporations to withdraw.
On the 2nd, the Ministry of Science and ICT re-announced the bidding for the construction and operation of the national AI computing center. This comes after no corporations or consortiums participated in the main bidding for the national AI computing center, which ran for 12 days from the 19th to the 30th of last month. Corporations that were reportedly preparing to participate, including the Samsung SDS-Naver-Alice Group consortium, as well as KT, Microsoft (MS), and SK Telecom-Amazon Web Services (AWS) consortiums, also withdrew from the bidding.
The national AI computing center is a type of AI data center constructed through a joint venture between the government and the private sector. This project aims to establish a special purpose company (SPC) with a total investment of 400 billion won, funded equally by the government and private corporations, each contributing 200 billion won. Including support from policy borrowing funds, there are plans to invest a total of around 2 trillion won to build a national AI computing center with a scale exceeding 1 exaflops (1EF). According to industry sources, building a data center of 1EF size requires more than 15,000 graphics processing units (GPUs).
The government plans to prioritize supplying a significant portion of the 10,000 GPUs it announced it would secure within the year to the national AI computing center. The interest from many domestic corporations is attributed to the fact that the interest rate on policy borrowing funds will reportedly be provided at the lowest industry level. It has been noted that over 100 private corporations submitted letters of intent to participate in the project to the Ministry of Science and ICT by the end of February.
For corporations experiencing a shortage of GPUs, the national AI computing center project represents a breakthrough, offering the possibility of receiving low-interest policy fund loans. However, the sudden decline in interest among corporations is attributed to the bidding condition specifying that the government must own 51% of the SPC’s equity, with private corporations owning 49%. There is substantial concern that if the government holds a majority stake, it would infringe on the autonomy of private corporations involved in the SPC. An IT industry source noted, "Even if a private corporation secures the business rights, having the government hold 51% equity means they must consider the government's position in all management decision-making processes, effectively participating in a government-controlled corporate management." He added, "For the required investment of 200 billion won, and borrowing policy funds in trillions to avoid operating at a loss, swift and market-appropriate business decisions are essential. Operating under a decision-making structure requiring final approval from the government may limit the profitability of the business."
Another IT industry source pointed out, "The bidding condition that services must be provided at low prices to universities, research institutes, small and medium-sized enterprises, and startups is also a stumbling block. From the government’s perspective, they will likely want to broaden the range of targets for affordable services," adding, "With limited resources for the project, conflicts with the government are expected over how services will be differentially allocated."
The bidding condition to raise the proportion of domestically produced AI semiconductors (NPU, neural processing units) to 50% by 2030 is also cited as a reason corporations have withdrawn from bidding. The requirement to use 50% of domestically produced NPUs, which have only recently begun to be commercialized after undergoing demonstration phases, instead of high-performance NPUs produced by global tech giants like Nvidia and AWS, could undermine the competitiveness of the national AI computing center project. A data center company representative stated, "It is unrealistic to impose a 50% usage target by 2030 when the market viability of domestically produced NPUs has not been proven," adding, "There is a need to increase the proportion of domestically produced NPUs when their performance is validated in the market and demand naturally arises."
Since this project is supported by billions of won of taxpayer money and large-scale government policy borrowing funds, there are discussions about the necessity for the government to secure a majority stake. If private corporations are allowed to retain a majority stake, questions arise about how to prevent them from using the national AI computing center for their own profit. Additionally, if private corporations set high service prices to maximize revenue, the initial plan to foster a domestic AI industry-academia-research ecosystem through affordable supply may collapse.
A representative from the Ministry of Science and ICT said, "The condition for the government to own 51% equity shows the government’s intention to implement more decisive support policies. There are concerns about government intervention; however, we will ensure management freedom for private operators as much as possible," adding, "Once the business operator is determined, discussions about reducing government equity can also be negotiated with private participants."
Regarding the condition to use over 50% domestically produced NPUs, he stated, "(After verifying market viability), we can gradually increase the proportion of domestically produced NPUs over the next five years until 2030," adding that "domestically produced NPUs have better cost-effectiveness (performance per price) and power efficiency (performance per power) than those from abroad, which would help enhance the profitability of the national AI computing center project and also benefit the domestic AI semiconductor ecosystem."