"Physical AI will be a major opportunity for Korea, which has a powerful industrial infrastructure and world-class artificial intelligence (AI) capabilities."
Gu Hyuk-chae, first Vice Minister of the Ministry of Science and ICT, said this at an advance briefing on "second-half 2026 Ministry of Science and ICT and Korea AeroSpace Administration work plans" held at Government Complex Seoul on the 15th.
The government will begin with a proprietary world model that produces synthetic data reflecting the laws of physics and build a domestic full stack that links a general-purpose physical AI foundation model with devices and an AI Semiconductor. After demonstrations at manufacturing, defense, care, and agriculture sites, the plan is to develop physical AI into an export industry.
A gigawatt (GW)-class AI data center to be built in Korea will be used as a base for domestic production and export of servers and power and cooling equipment. Development of next-generation semiconductor technologies to serve as the brain of physical AI will proceed in parallel. The Ministry of Science and ICT and the Korea AeroSpace Administration reported these second-half work plans to the president at the Blue House state guest house on the 16th. The three megaprojects set by the government are AI data centers, physical AI, and K-semiconductors.
Vice Minister Gu said, "In the second half of this year, we will begin independent development of a world model that mass-produces synthetic data," adding, "We will complete a domestic physical AI full stack that combines a general-purpose physical AI foundation model that acts like a person with devices and an AI Semiconductor, expand it across all domestic sectors, and export it overseas."
◇ Physical AI to allow foreign corporate participation, but "domestic production first"
This year, the government will launch development of a proprietary world model that mass-produces high-quality synthetic data reflecting the laws of physics. Based on data accumulated through the world model, it will train physical AI and aims to secure a general-purpose physical AI foundation model within three years.
It will be linked to devices such as robots, an AI Semiconductor, and software to complete a domestic physical AI full stack. The developed technologies will spread from manufacturing sites to defense, care, and agriculture.
Foreign corporations can also participate in the physical AI project. However, the government emphasized that its top policy priority is consolidating the world model, foundation model, AI Semiconductor, and devices around domestic technology.
Park Tae-wan, Director General for Information and Communications Industry Policy at the Ministry of Science and ICT, said regarding whether foreign corporations can participate, "There is no restriction on overseas firms entering during the open call process," but added, "We prioritize domestic production of physical AI with our technology."
Director General Park said, "Through last year's preliminary verification project, we confirmed the potential to implement physical AI for manufacturing sites with our technology," adding, "Since we are pushing the main project based on those results, this will be considered during the evaluation as well."
The government plans to first secure demonstration results at domestic manufacturing sites and then bundle physical AI models and semiconductors, along with robots and equipment, into a single package for export to overseas markets.
◇ Ninety percent of AI data center capex is IT, power, and cooling… pursuing package exports
The total private investment in AI data centers disclosed by the government is 550 trillion won. This is the sum of the investment plans submitted to the government by SK, GS, and Naver, and the government understands that funds to be attracted from overseas are also included.
Choi Dong-won, Director General for AI Infrastructure Policy at the Ministry of Science and ICT, said, "The amount released this time is the investment scale that SK, GS, and Naver have informed the government," adding, "The private sector will lead, while the government will support power, water, and permitting issues so that investments are executed swiftly and smoothly."
Among SK's ongoing projects, the Ulsan site has been finalized, and other regional sites are being sought. GS is pursuing data center construction linking multiple regions centered on Donghae, Gangwon, and Naver is doing so centered on Sejong. Candidate sites not yet finalized were not disclosed due to corporate investment confidentiality and other reasons.
What the government is focusing on is the massive equipment demand generated during data center construction. According to Director General Choi, about 60% of data center capital expenditures are for information technology (IT) equipment, 20% for power equipment, and 10% for cooling equipment. Since about 90% of capex goes to IT, power, and cooling equipment, the government plans to link data center construction to growth of the domestic equipment industry and expansion of exports.
Director General Choi said, "Not only HBM but also transformers and chillers have already become export products," adding, "Rather than selling a single piece of equipment, we need to bundle multiple devices into packages to expand the export market."
The government will also promote domestic production of equipment required for ultra-large data centers, such as large uninterruptible power supplies (UPS) and emergency generators. While small-building products are produced domestically, the government judges that large product lines applicable to ultra-large AI data centers are not yet sufficiently established.
Starting next year, the government will support domestic production and advancement of core equipment and link talent development, test facilities, finance, and export support with data center clusters. The goal is to help domestic corporations enter supply chains in regions where data center investment is growing, such as the United States, Europe, and Asia.
◇ Heterogeneous stacking of memory and compute devices… "tenfold performance and energy efficiency"
The next-generation semiconductor project, which will serve as the brain of physical AI, will focus on sub-1-nanometer (nm, one-billionth of a meter) ultra-fine devices and next-generation high bandwidth memory (HBM) technologies.
Choi Hyun-ok, head of the research and development policy division at the Ministry of Science and ICT, said, "The technology currently developed by the private sector or used by industry is HBM, which stacks memory," adding, "In the new project, we will develop heterogeneous stacking technology that bundles not only memory but also compute devices."
The government plans to develop next-generation materials and device structures below 1 nanometer to improve semiconductor performance more than tenfold over current levels. With heterogeneous stacking technology that combines memory and compute devices, it also aims to improve energy efficiency more than tenfold. A detailed research and development roadmap will be prepared within the year.
The AI Semiconductor will not stop at chip development but will be consolidated with infrastructure, networks, software, and services using domestic technology. The plan is to secure an early market and demonstration cases by prioritizing application of domestic AI Semiconductors to products of large domestic companies and to the public sector.
◇ Free domestic AI: operator to be selected in Aug., full service to launch within the year
The government will select in Aug. an operator for Everyone's AI, a domestic general-purpose AI chatbot that the public can use without expense or usage limits, and will push to launch the full service within the year after a beta service in Sept.
It will include functions that guide government support programs such as youth stipends and welfare benefits and even handle application procedures. Starting next year, it will be advanced into an AI agent that performs individual tasks.
Addressing criticism that the within-year launch schedule is too tight, Bong Joon-ho, head of the AI Policy Planning Division at the Ministry of Science and ICT, explained, "This project is not about developing a new model, but about developing a service using existing domestic models."
Director Bong said, "We have heard corporate opinions more than 30 times, and the performance of domestic models continues to improve," adding, "We believe service within the year is possible."
However, the scale of GPUs and operating costs needed to maintain the free service next year has not yet been finalized. Director Bong said, "We are consulting with fiscal authorities, so we can speak to the exact budget size and support method after consultations conclude," adding, "We will review necessary government support so that all citizens can use basic AI functions without burden."
The total number of GPUs to be secured by the government and the private sector is 260,000. Of these, the private sector will secure 210,000, and the government 50,000. The volume of GPUs the government has secured so far is about 35,000 units based on Nvidia B200. Of these, about 11,600 units based on B200, prepared with last year's supplementary budget, are currently in use.
Director General Choi Dong-won said, "We are allocating GPUs around three pillars: proprietary foundation models, major national projects, and support for industry-academia-research," adding, "We are preparing plans to utilize even incoming volumes in the most efficient way nationally."
◇ Industrializing SMRs and space technologies as well… "hard to compete with Starlink on economics"
To meet the growing power demand driven by expansion of AI data centers, the government will also promote development of next-generation small modular reactors (SMRs) and nuclear fusion technologies.
Next year, the government will launch a public-private joint project to build a nuclear-powered ship equipped with an SMR. In the fusion field, it will carry out technology development with the goals of power generation in the 2030s and completion of a demonstration reactor in 2035.
In space, the government will push for the fifth launch of the Nuri rocket in the second half, carrying 15 satellites including very small cluster satellites. It will also pursue development of a reusable next-generation launch vehicle to cut launch costs to one-tenth of current levels and select a site for the second space center. In 2029, it will launch a lunar orbit communications satellite, and in 2030, a small lunar lander. The government also plans to build a Korean low Earth orbit satellite communications network by 2035.
However, the government acknowledged that it would be difficult to compete directly on commercial economics with Starlink, which already operates a massive satellite communications network. Kwon Hyun-jun, Director General of Space and Aviation Policy at the Korea AeroSpace Administration, said, "With Starlink already putting more than 10,000 satellites into orbit, we think it is difficult to confront them with economic competitiveness," adding, "But a low Earth orbit satellite communications network is essential because it concerns national security and communications sovereignty."
The government is reviewing ways to first secure the minimum communications capacity needed in defense, disaster, and public sectors. It plans to develop core technologies by 2030, verify them by 2032, and complete an independent satellite communications network by 2035.
Vice Minister Gu said, "The step we take now will decide whether we become a perpetual chaser in the future or a winner who enjoys infinite opportunities," adding, "We will push work plans swiftly and boldly so that science, technology, and AI can boost economic vitality and open a new future for a leap forward."