Industry Minister Kim Jung-kwan said he agreed with a proposal to require that at least 30% of the chips used in pilot projects for artificial intelligence data centers built inside industrial complexes be domestically made neural processing units, telling a lawmaker, "That is exactly what I wanted to say." The remark came as the lawmaker pointed out that funding for the related program had been eliminated entirely, even though giving Korean products a chance to be used in the field is seen as key to producing unicorn companies in the fabless chip market. NPUs are system chips designed specifically for AI computation and are expected to become the core of future AI infrastructure, replacing the graphics processing units now in widespread use.
Kim made the comment on the 6th during a parliamentary audit by the National Assembly's Trade, Industry, Energy, SMEs and Startups Committee, responding to a question from independent lawmaker Kim Jong-min. "What you described is the core project of the mega project," the minister said. "I prepared it quite ambitiously myself, and to put it bluntly, I was furious when the budget was cut." When the lawmaker urged him to say he would resign as minister if the program were not funded, Kim replied, "I have already said that," adding, "I have great affection for this project. I will try again."
The program in question is the construction and demonstration of on-site AI data centers, known as edge AIDCs, in industrial complexes. It aims to build small, distributed AI data centers needed for physical AI while using domestic NPUs to open a market for promising companies. The Ministry of Trade, Industry and Energy had originally sought to carry out up to three additional projects next year, each requiring 28.6 billion won ($20 million) in state funding per industrial complex, but the plan was scrapped entirely over objections from the Ministry of Planning and Budget. This year's budget allocated 14 billion won in state funding, allowing a pilot project to begin at the Myeongji Noksan National Industrial Complex in Busan, meaning government policy has effectively moved backward.
"I wondered how something like this could happen, so I asked the budget ministry, and they said they needed to see results," the lawmaker said. "The whole reason for doing this project is to create results. Does that make any sense?" He added: "If we follow the budget ministry's logic, we can only put money in by 2028, after seeing the outcome of the pilot project under way in Busan. Can we compete internationally at this pace?"
Industry officials stress that a system of public purchases of products from promising companies is essential to reviving the system chip fabless sector. "No matter how good the technology is, it is hard to win orders without a sales record," an industry official said. "Domestic products need to be used to some degree in the system chips that go into public infrastructure, to provide the seed money that lets unicorn companies grow."
The lawmaker also said: "What is the point of spending 500 billion to 600 billion won to make AI chips? Companies want to sell their products abroad but cannot, because they have never had a chance to demonstrate them." He stressed that "this is no time to be trying to save about 30 billion won" and that "this project has to be done even if it fails." He added that "last year, the requirement that 50% of chips at the national AI computing center be domestic NPUs was also deleted," arguing that "even if we cannot do more, we need at least two edge AIDC projects next year."
