The national supercomputer No. 6 introduction project has encountered an exchange rate obstacle this time. Amid a global competition for securing artificial intelligence (AI) chips, the price of GPUs (graphics processing units) has skyrocketed, leading to projections that the already delayed project may face further difficulties once again.
According to the Ministry of Science and ICT and the Korea Institute of Science and Technology Information (KISTI) on the 10th, the bidding notice for the construction of the national supercomputer No. 6, which was supposed to be announced last November, has yet to be issued. It is expected that the bidding notice will be released this month, but experts in the science and technology sector already predict that the project will struggle to proceed normally.
The national supercomputer No. 6 was originally scheduled to start operating this year. In 2022, the government allocated a budget of 292.9 billion won for the introduction of the national supercomputer No. 6. The goal was to establish a supercomputer that ranks among the top ten globally, with system performance of 600 petaflops, storage space of 200 petabytes, and network bandwidth of 400 gigabits per second.
However, the surge in GPU prices has hindered progress. With the emergence of ChatGPT, a competitive development of AI technology has progressed globally, leading to a sharp increase in the price of the core resource, GPUs. The budget set during the preliminary feasibility study in 2022 could not keep up with the skyrocketing GPU prices. No corporations submitted bids in six rounds of bidding, resulting in all being canceled. The Ministry of Science and ICT and the Ministry of Strategy and Finance conducted a review of the appropriateness of the preliminary feasibility study last year, increasing the budget to 448.3 billion won, a 53% increase. The plan is to finalize GPU supply contracts within this year and operate the national supercomputer No. 6 in early next year.
While the introduction of No. 6 has been delayed, the utilization rate of No. 5 has reached saturation. Performance is also an issue. When established, No. 5 ranked 14th in the world in terms of performance, but as of June last year, it had fallen to 75th. This is why the government hurried the introduction of No. 6 by even reviewing the appropriateness of the preliminary feasibility study.
Minister Yoo Sang-im noted the expansion of the No. 6 budget, stating, "The demand for ultra-high-performance computing infrastructure is rapidly rising to enhance the global competitiveness of our country's science and technology, including artificial intelligence, and we will quickly introduce the national supercomputer No. 6, the core infrastructure, to contribute to new scientific discoveries, research and development innovation, and strengthening industrial competitiveness."
However, exchange rates are now a problem. The newly set budget for No. 6, after reviewing the appropriateness of the preliminary feasibility study, was based on the average exchange rate for 2023, which is the year just before the investigation under relevant laws. The exchange rate was 1,305.41 won to the dollar. However, since the second half of last year, the exchange rate has surged to the 1,450 won range. All GPUs will be supplied by overseas companies, meaning purchases must be made based on the dollar exchange rate, raising doubts about whether it can adequately procure GPUs with the budget set based on the 2023 exchange rate.
A total of 8,800 GPUs will be used for No. 6. Considering that NVIDIA's flagship GPU, the H100, costs about $35,000 each, the total amounts to $308 million. Based on the current exchange rate, this equates to approximately 449.0332 billion won. With the 2023 average exchange rate, this would be around 402.06628 billion won. The difference is 47 billion won, which is over a 10% discrepancy.
The government was also aware of these issues. During the review of the appropriateness of the preliminary feasibility study, the government received GPU estimates from four corporations. The government recalculated based on the 2023 exchange rate of 1,305.41 won, whereas the four corporations applied the exchange rate from last year when they provided their revised estimates, reporting rates between 1,373 and 1,389.7 won. The government indicated that the recalculated estimate it provided was lower than the estimates from the corporations due to the exchange rate differences.
The expense of maintaining and servicing the supercomputer is also a concern. For No. 6, maintenance and servicing will be provided free for the first year, but will require payment for the subsequent four years. The government has budgeted the maintenance expense at around 6% of the total amount. Since the maintenance expense will apply the exchange rate at the time of payment, if high exchange rates persist, the total project cost will inevitably rise.
Although the risk due to exchange rates is significant, there are no separate safeguards against exchange rate fluctuations in the national supercomputer No. 6 introduction project. The report prepared by the government during the review of the appropriateness of the preliminary feasibility study states, "Although it is true that the national supercomputer No. 6 is an imported product that is not produced or supplied domestically, which makes it susceptible to exchange rate influences, the rationale for addressing exchange rate fluctuations for the introduction of this system is insufficient." This means that it is not possible to increase the budget set through the preliminary feasibility study just because the exchange rate has surged.
A representative from a domestic corporation that has introduced a supercomputer remarked, "The national supercomputer introduction project has faced difficulties in the past due to rising exchange rates, and it's hard to understand why a safeguard against exchange rate fluctuations was not established in a project that absolutely relies on imported products," adding, "The entire world is engaged in a "war for money" to secure high-performance AI chips, and purchasing 8,800 H100s with the currently assigned budget does not seem feasible."