South Korea’s Ministry of SMEs and Startups (MSS) announced on Thursday the launch of the “AI Startup LLM Challenge,” an ambitious project designed to connect innovative AI startups with large corporations’ infrastructure. The initiative aims to accelerate the development and commercialization of specialized AI solutions through strategic partnerships.

The program represents a significant step in South Korea’s push to enhance industrial productivity through AI transformation, while simultaneously creating new market opportunities for emerging AI companies. The ministry’s announcement comes as large language model technology rapidly transforms industries worldwide, from manufacturing and finance to content creation.

Since March 2025, MSS has received continuous requests from the field to facilitate collaboration between global technology giants possessing LLM infrastructure and AI startups seeking real-world applications for their innovations. The challenge was established as part of the government’s second supplementary budget in response to these market demands.

Three major conglomerates with proprietary LLM capabilities will participate in the initiative: KT, Naver Cloud, and Oracle. Together, they will offer 19 distinct projects for application, with MSS planning to select 20 AI startups based on technological capabilities and other evaluation criteria. Each selected startup will receive up to 100 million Korean won in collaboration funding.

KT will leverage its proprietary LLM “Mi:dm 2.0” to recruit six AI startups for five projects, including AI security solutions and automated report and content generation systems. The telecommunications giant will provide startups with comprehensive development environments, proof-of-concept opportunities with existing agents, and cloud testing infrastructure. Outstanding performers will gain access to external business consortiums and joint commercialization opportunities with KT.

Naver Cloud plans to recruit eight AI startups for eight projects utilizing its HyperCLOVA X language model. The focus will be on developing AI agents for advanced data-driven sales, inventory management, and demand forecasting in manufacturing environments. Participating startups will receive Naver Cloud credits, office hours, infrastructure architecture support, and security consulting. Top performers may gain access to the Naver Cloud Marketplace and adoption opportunities with partner companies.

Oracle will recruit six AI startups for six industry-specific projects using its OCI Generative AI platform, which optimizes verified third-party LLMs on the company’s infrastructure and delivers them through APIs. The projects will target specialized solutions for sectors including manufacturing and finance. Oracle will provide cloud testing environments, consulting services, and credits for proof-of-concept development. Successful startups will receive support for global marketplace registration and international business matching through Oracle’s global partner network.

The application period runs from Thursday, July 17, through Wednesday, August 6. Detailed information is available on the K-Startup portal and the MSS website.

Beyond this initiative, MSS plans to expand collaboration opportunities by connecting leading domestic AI fabless companies with super gap AI startups, enabling them to access neural processing units (NPUs) for developing enterprise-optimized AI solutions. The ministry also intends to facilitate technology transfer and provide specialized commercialization programs matching promising AI startups with core technologies from government-funded research institutes.

Kyung-won CHO, Director General for Startup Policy, emphasized South Korea’s advantageous position for AI transformation, citing the country’s manufacturing-centered industrial structure and the growth of data-based platform enterprises. “The competition in the AI field is no longer about who develops the technology first, but about who applies it to industries and companies faster,” Cho stated. “MSS will continue to implement policies to ensure that AI transformation led by AI startups can be swiftly realized.”