Korea’s KT, Microsoft form strategic alliance on AI, cloud sectors

South Korea’s leading telecommunications service provider KT Corp. has formed a strategic alliance with US tech giant Microsoft Corp. to collaborate on artificial intelligence, cloud and information technology projects.

KT Chief Executive Kim Young-shub and Satya Nadella, Microsoft CEO and board chairman signed a partnership agreement at Microsoft’s headquarters in Redmond, Washington on Monday.

KT said the alliance is designed to leverage its know-how in operating domestic telecom services and Microsoft’s cutting-edge technology to introduce highly competitive AI innovations in Korea.

Under the agreement, the two companies plan to jointly develop AI, cloud and IT services tailored for the Korean market.

The Korean mobile and internet service company said the two firms aim to establish an AI and cloud innovation center, accelerate related R&D projects and cultivate talent in the AI and cloud domains.

KT and Microsoft didn’t provide terms of the deal, but industry officials said they likely committed to investing trillions of won, or multi-billions of dollars, in their joint projects.

KT said detailed implementation strategies will be unveiled by September.

SOVEREIGN AI, SOVEREIGN CLOUD

Under the partnership, KT plans to use Microsoft’s technology for “sovereign AI and sovereign cloud” projects to deliver enhanced data sovereignty and security features to public and financial sectors.

“MS has been seeking a Korean partner given Korea’s advanced IT and cloud services compared with other Asian countries. Also, it’s not easy for a foreign firm to handle Korea's complex and evolving regulatory landscape,” said a KT official.

An investor in OpenAI, the operator of ChatGPT, Microsoft has promised to invest $1.5 billion in a sovereign cloud project with G42, or Group 42 Holding Ltd., an AI development firm in the United Arab Emirates.

Last year, KT unveiled Mi:dm, a generative AI service for corporate clients.

The generative AI service is a large language model (LLM) trained on over one trillion tokens, the largest volume among Korean AI services. A token is the basic unit of text or code that an LLM uses to process and generate language.

Mi:dm, meaning "belief" in Korean, is a private LLM that companies can customize for their business needs, according to KT.

Under its partnership with Microsoft, KT plans to develop its Mi:dm AI into an industry-specific smaller LLM or sLLM model, it said.

KT TEAMS UP WITH AMAZON

In February, KT signed a strategic partnership with Amazon Web Services (AWS) to bolster customized mobile and generative AI services for corporate customers.

KT CEO Kim said the company will continue to pursue strategic partnerships with Big Tech companies and startups to strengthen its AI capabilities.

“KT is second to none in the telecommunications field, but weak in IT capabilities,” he said.

He said KT hopes to transform into an AICT company by integrating AI with communication technology (CT).

KT said last June it will spend 7 trillion won ($5.4 billion) by 2027 to become the country’s largest AI service provider, targeting the robot, healthcare and education markets.

“The partnership with Microsoft will give us the ability to swiftly respond to the rapidly changing digital market,” the KT CEO said.

Write to Ji-Eun Jeong at jeong@hankyung.com

In-Soo Nam edited this article.