Microsoft, KT to invest $1.8 bn in Korea’s AI, infrastructure

Microsoft Corp. and KT Corp. plan to invest 2.4 trillion won ($1.8 billion) in South Korea’s artificial intelligence, cloud and infrastructure including an AI model dedicated to the country in the next five years.

South Korea’s telecom giant KT said on Thursday the two companies will unveil an AI for the country in the first half of next year, which the carrier said is expected to provide better quality and services than other AI models.

The two companies aim to develop the AI model based on GTP-4o, a multilingual, multimodal generative pre-trained transformer developed by Microsoft-backed OpenAI, and introduce specialized models for each industry based on the Phi-3.5, a small language model (SLM) of Microsoft in the first half of 2025.

“Many companies claim they have Korean-style AIs but it is all talk,” said KT Chief Executive Kim Young-shub said at a press conference in Seoul to unveil details of its partnership with Microsoft.

“The key to success is to quickly implement features that users want and recognize. It is not a time to focus on cost-effectiveness.”

KT plans to set up a subsidiary specializing in AI transformation with AI and cloud experts in the first quarter of next year. The unit is set to provide consulting, architecture and design services for AI transformation.

The South Korean carrier and Microsoft decided to establish an organization for research of AI and cloud technology next year.

“KT’s capabilities on AI transformation are not strong enough, so we need to upgrade it by cooperating with Microsoft,” Kim said.

TO QUINTUPLE AI TRANSFORMATION BUSINESS SALES

Microsoft and KT joined hands last month to drive AI transformation in the carrier and South Korea through a five-year multibillion-dollar strategic partnership.

The two companies in July agreed to cooperate on AI, the cloud and IT to propel the country’s AI and cloud innovation.

“The cooperation covers all core ICT technology based on AI,” said Microsoft Korea CEO Willy Cho during the conference, referring to information and communications technology. “it is a practical and definite partnership, which includes long-term research and development, joint engineering, capacity improvement and sales marketing.”

Through the partnership, KT aims to ramp up the revenue of its AI transformation business, which includes AI, the cloud, consulting and information technology (IT) solutions, to 1.4 trillion won by 2029 from an estimated 269 billion won in 2025.

TO FOCUS ON SLM

KT does not plan to compete with major technology companies in the large language model (LLM) market.

“The global LLM market is dominated by the top three companies,” said KT Chief Technology Officer Phil Oh.

Open AI, Google, Meta Platforms Inc., Anthropic PBC and Microsoft are the world’s five largest LLM companies, according to Data Science Dojo, a US e-learning company.

KT is set to focus on supplying SLMs customized for corporate clients by advancing MI:DEUM, its hyperscale AI introduced last year, Oh said.

The company will concentrate on the local AI transformation market in the early stage, although it is considering expanding the business into other countries.

It plans to jointly develop with Microsoft a cloud service specializing in local regulations and security issues for the public and financial sectors in the first quarter of next year. The service is expected to strengthen its business-to-business sector by helping companies and institutions secure a stable cloud environment.

KT plans to seek partnerships with other companies.

“We are not just relying on Microsoft,” Kim said. “We will work with Microsoft on what they are good at while leaving the door open to cooperate with other companies.”

KT plans to hire about 1,000 specialists in ICT sectors including AI this year, although it is in difficulty in securing talent.

“We failed to achieve the initial goal because we could not find talents,” Kim said. “We will continue to do our utmost to foster internal talents while seeking external specialists.”

Write to Ji-Eun Jeong at jeong@hankyung.com
 
Jongwoo Cheon edited this article.