The South Korean government plans to allocate over 3 trillion won (approximately $2.3 billion) of its 9.9 trillion won AI budget for 2026 to the purchase of NVIDIA graphics processing units (GPUs). The remaining budget, totaling around 7 trillion won, is primarily directed toward large IT companies, raising concerns about the lack of support for small and medium-sized IT firms.
According to the IT industry on August 25, the Ministry of Science and ICT's 'AI Computing Resource Utilization Enhancement Project' will see at least 3 trillion won spent on GPU purchases this year.
The ministry has earmarked 2.08 trillion won for GPU acquisition costs. This initiative supports companies or consortia with a track record of operating GPU as a service (GPUaaS) by covering the costs of purchasing GPU-related equipment, rather than the government directly buying the GPUs. This means that over 40% of the approximately 5.1 trillion won allocated to the ministry's AI budget will flow to NVIDIA.
Additionally, it is expected that separate GPU purchase costs from various ministries, universities, and local governments will exceed 1 trillion won this year. Currently, the price for a single GPU system (comprising four NVIDIA H200 GPUs) is about 440 million won. Besides the 15,000 units the government plans to secure this year, local and public institutions will require at least 3,000 additional GPUs for their infrastructure, translating to an estimated 1.32 trillion won in GPU acquisition costs outside the ministry's AI computing resource project.
In total, this means that 3 trillion won of government funds will directly contribute to NVIDIA's revenue. Furthermore, large-scale projects such as the Independent Foundation Model, Everyone's AI, and the National AI Computing Center, which are worth hundreds of billions to trillions of won, are also being led by consortia dominated by large corporations or companies backed by significant capital.
In contrast, the actual participation of small and medium-sized enterprises in government contracts is significantly lower. From January 1 to August 24, there were 333 projects related to 'artificial intelligence' listed on the government procurement site, totaling 93.9 billion won. This accounts for less than 1% of the total 9.9 trillion won budget. Given the nature of the technology market, the trickle-down effect from major AI projects is also unlikely. This has led to criticism that government funding is concentrated on foreign companies and large corporations.
The government’s AI budget has increased by 200% compared to the 2025 budget proposal, with nearly 30% allocated for NVIDIA GPU purchases. However, the procurement of AI projects through government contracts has only risen by 50.6% compared to the same period last year (approximately 63.4 billion won). Even with additional contracts expected by the end of the year, it is projected that the share of AI project contracts awarded to small and medium-sized enterprises through the Public Procurement Service will only reach about 2% of the total budget.
* This article has been translated by AI.
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