As the national artificial intelligence (AI) computing infrastructure construction project failed twice due to a lack of bidders, the government decided to revise and ease the project solicitation requirements before launching a re-tender. Attention is focused on whether the bidding condition of 'government ownership of a majority equity' that initially deterred corporations will be modified in the re-tender.
According to industry sources on the 23rd, the Ministry of Science and ICT will unveil new solicitation conditions for the national AI computing center construction project in July. This follows the first solicitation that failed on the 30th of last month, as there were not a single bidding corporation in the second solicitation held on the 13th of this month.
The national AI computing center is an AI data center being constructed in collaboration between the government and the private sector. The project is being promoted by establishing a special purpose corporation (SPC) with a total investment of 400 billion won, contributed equally by the private corporations and the government at 200 billion won each. When including support from borrowing funds for policy finance, a total of around 2 trillion won will be invested to establish a national AI computing center with a scale of over 1 exaflops (1EF).
The Ministry of Science and ICT is reportedly discussing ways to revise the bidding condition for state ownership of 51% equity to encourage participation from private corporations. This follows concerns that government ownership of a majority equity would infringe upon the autonomy of private corporations that participate in the SPC, leading consortiums like Samsung SDS, Naver, and Alice Group to abandon their bidding. An IT industry insider noted, “For a private corporation to contribute 200 billion won and borrow policy funds in the trillions without operating at a loss, swift management decisions are required. However, the decision-making structure requires the final approval of the government as the largest shareholder, which could impose significant limitations.”
The Ministry of Science and ICT is said to have diagnosed that the business was unsuccessful due to concerns about diminished management autonomy for private corporations, as well as the risk burden on them in case of management failures. In particular, expectations have grown that officials like Ha Jung-woo, the chief planner of AI at the presidential office who recently worked at Naver Cloud, and Bae Kyung-hoon, the appointed Minister of Science and ICT and head of LG AI Research Institute, will help create new solicitation guidelines reflecting the opinions of private corporations that call for abandoning the public equity requirement of 51%. To achieve the government's goal of launching AI computing services by the end of this year, recruitment of participating corporations must be completed by at least August.
However, from the government's perspective, it is not an easy situation to forgo the condition of 51% equity nationalization. This is because it is challenging to exercise oversight when the national AI computing center is supported by hundreds of billions of won of taxpayer money and large-scale government policy borrowing funds, even if it is utilized solely for the benefit of private corporations. Concerns have also been raised that if private corporations set high service prices for universities, research institutions, small and medium-sized enterprises, and startups to maximize revenue, the original plan to nurture the domestic AI ecosystem could be derailed.
Kim Yong-seok, a distinguished professor at Gachon University, said, “It is not necessary for the government to hold a majority equity as a means of controlling excessive profit-seeking by private corporations. The regulatory authorities have various means at their disposal.” He also stated that “to enhance the operational efficiency of the national AI computing center, it is necessary to ensure management autonomy by transferring more than 51% equity to private corporations.”