South Korea is rapidly positioning itself as a global hub for “physical AI,” forging major partnerships with Nvidia and other US tech leaders to integrate artificial intelligence into manufacturing, robotics and industrial systems. These collaborations, alongside new diplomatic and industrial initiatives, aim to boost the country’s computing power and solidify its role in the global AI supply chain. However, experts warn that heavy reliance on US technology could threaten South Korea’s long-term technological sovereignty, underscoring the need for independent AI and data infrastructure.
South Korea is racing to the front of a phase of innovation widely referred to as the “age of physical AI,” where artificial intelligence expands beyond data centers and screens into robots, vehicles and factories, at a time when the government has framed this as an existential mission to fuse the country’s manufacturing power with the latest innovation.While the world’s financial markets focused on the outcome of trade negotiations between Presidents Donald Trump and Xi Jinping on the sidelines of the APEC summit last week, host nation South Korea unveiled a separate breakthrough: agreements by Nvidia to supply massive computing capacity and to join national AI projects (see here).
Soon after President Lee Jae Myung held a meeting with Nvidia Chief Executive Jensen Huang on Friday, the government announced that the US company pledged to cooperate with such top companies as Samsung Electronics, Hyundai Motor Group, SK Group and Naver on securing latest-model chips, building physical AI systems and developing next-generation AI technologies.
According to the presidential office, Huang and the South Korean participants discussed “ways to cooperate in building AI infrastructure and collaboration in such areas as building physical AI, conducting joint research on AI technologies, fostering AI talent, and supporting startups.” Officials said the partnership would position South Korea as a testbed for advanced AI manufacturing systems.
The scale of these achievements, together with recent agreements with other US technology companies and the American government, is striking. Yet the challenges are equally formidable: deepening integration with the US ecosystem could erode South Korea’s technological sovereignty and weaken its capacity to develop independent computing and data infrastructure.
— ‘Win, win, win’ partnership —
This was a quintessential “win, win, win” deal — to use a phrase from Trump’s keynote speech at a side event at the Gyeongju Asia-Pacific Economic Cooperation summit — because the partnerships are designed to benefit not only Nvidia and South Korea but the global AI industry at the same time.
“If Nvidia is said to be driving the speed of AI innovation, then Korea is the optimal partner to harness that speed and guide innovation in the right direction,” President Lee said. “We will spare no effort to support this cooperation so that it becomes a successful example benefiting both Korea and the international community.”
The deals follow a flurry of developments positioning South Korea as an emerging AI hub. OpenAI and Anthropic — the world’s leading foundation-model developers — both decided to open regional offices in Seoul and pledged to cooperate with government agencies and local companies as part of the national drive to become one of the top three AI powers globally (see here and here).
During the APEC summit, Seoul also advanced on the diplomatic front, agreeing with the US to expand cooperation in AI, 6G, quantum computing, biotechnology and space. At the same time, it persuaded the US, China and APEC’s other 18 member economies to endorse its proposal to coordinate efforts to harness AI innovation responsibly across the region (see here and here).
Together, these initiatives will quadruple South Korea’s AI computing power to more than 300,000 high-performance GPUs, creating one of the world’s densest clusters, and strengthen the country’s diplomatic leverage in the Asia-Pacific region and its technology partnership with Washington, reinforcing its status as a central node in the global AI supply chain.
— Betting big on physical AI —
South Korea is betting big on physical AI to transform its world-class manufacturing base — spanning cars, chips, ships, robots and defense equipment — into an intelligent industrial ecosystem. The government sees this as essential to offset the effects of a shrinking population, slowing productivity, and intensifying competition with China in advanced technologies.
To accelerate the transition, the Ministry of Science and ICT launched the Physical AI Global Alliance, uniting research institutions, corporations and international partners. The alliance targets key sectors such as robotics, autonomous vehicles, smart manufacturing and wellness technology, aiming to connect industrial expertise with AI-driven systems (see here).
Calling the 2026 government budget “the first to open the AI era,” President Lee also told a full session of parliament on Tuesday that the government will make “focused investments in key projects by leveraging the country’s strong manufacturing capabilities and vast data resources.” The message was clear: physical AI is now national industrial policy (see here).
Nvidia’s Huang publicly praised South Korea as one of the few countries combining all three essential pillars of physical AI — software, AI and manufacturing. “When you combine software, AI technology, and manufacturing, you have the opportunity to truly take advantage of robotics,” he said at a side event during the APEC summit.
This layered approach mirrors what the World Economic Forum calls the “physical AI stack” — five interconnected levels from robotics hardware to applications. South Korea’s coverage is nearly complete, with Samsung and SK supplying high-end chips, Hyundai and SK building digital twins, and Naver and LG AI Research developing world-class foundation models.
Ha Jung-woo, former head of AI research at Naver and now chief presidential aide on AI policy, told broadcaster JTBC on Monday that the Nvidia deals could serve as a “win-win strategy” for both the US company and South Korea’s economy at a time when South Korea is increasingly threatened by China’s manufacturing growth.
— Strategic trade-off —
However, some experts warn that the new partnerships could also become a strategic trap. While they position South Korea as a global leader in industrial and sovereign AI, excessive reliance on US technology risks turning opportunity into vulnerability, leaving the nation highly dependent on a single vendor’s ecosystem for its computing backbone.
“This is not just a hardware purchase — it’s a national gambit,” Lee Seung-hyun, director general at the Committee on the Digital Platform Government, told MLex. “In this alliance, Nvidia gains immediate profit and strategic dominance, while Korea risks being locked into its technological orbit for the long term.”
Analysts note that Nvidia’s push deeper into South Korea coincides with tightening US export controls on AI chips to China, a shift that makes South Korea both a crucial new market and a proving ground for its global AI-computing ecosystem. In effect, Seoul risks becoming just the laboratory where Nvidia refines the infrastructure for physical AI.
To mitigate that dependence, experts suggest a two-track strategy: deepening cooperation with Nvidia and other global players while investing in domestic alternatives such as locally designed neural processing units, or NPUs, and a homegrown physical-AI foundation model so that it can secure a firm ground for digital sovereignty.
Experts also warn that South Korea must not grow complacent after its Nvidia deals but instead pursue clear alternative strategies to develop its own foundation models for physical AI and secure manufacturing data generated at factories across the country over several decades to ensure long-term independence, innovation, and data sovereignty in the AI era.
“The additional GPUs have given wings to South Korea,” Lee said. “But where those wings take us depends entirely on our choices. If we celebrate too early and overlook the risks, our dependence will only deepen — and the very intelligence we export may end up owned by others.”
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