[AI Hegemony War] While Apple Acquired 25 AI Companies in 5 Years... Korea Just Watched

[Asia Economy Reporters Seulgina Jo, Nahum Kang, Minyoung Cha] 25 to 3. This is the number of AI-related companies acquired by Apple and Samsung Electronics over the past five years.

While Apple acquired as many as 25 AI companies, among Korea's leading ICT companies, only Samsung Electronics participated in the acquisition race to maintain its presence. Leading domestic platform companies such as Naver and Kakao, as well as LG Electronics, SK Telecom, and KT?which have announced their transition to AI companies?have no record of acquiring AI companies in the past five years. This has led to repeated calls that domestic companies, which are already late in the AI hegemony war driving the Fourth Industrial Revolution, need to take more proactive steps. There are also increasing voices emphasizing the need for bold national-level investment to precede these efforts.

◇Apple's AI Company Acquisition Race, What About Korea?

According to industry sources on the 2nd, Samsung Electronics acquired a total of three AI-related companies between 2016 and 2020. Following the acquisition of AI platform developer VIV Labs located in Silicon Valley, USA, in November 2016, Samsung acquired Plunty in 2017 and K Engine in the USA in 2018. Since Vice Chairman Lee Jae-yong ordered the strengthening of AI capabilities in 2018, Samsung Electronics has shown the most active investment in AI technology domestically.

It is difficult to find cases of AI-related company acquisitions among other major domestic ICT conglomerates besides Samsung Electronics. Even companies actively investing in AI, such as Kakao and LG Electronics, have only made partial equity investments. An industry insider said, "Considering the size of the domestic market, it is hard to find cases of AI company acquisitions," adding, "Even large companies mainly focus on equity investments and technology research and development (R&D)."

On the other hand, global ICT companies at the forefront of the AI hegemony war are moving forward without hesitation. According to a GlobalData report, Apple has led the global AI company acquisition race by incorporating as many as 25 companies such as Silk Labs, Turi, and Drive as subsidiaries over the past five years. Considering that Apple CEO Tim Cook recently revealed that the company acquired 100 companies over the past six years, about one-quarter of these acquisitions were focused on AI companies.

Following Apple, Accenture (17 companies), Google (14 companies), Microsoft (MS, 12 companies), and Facebook (9 companies) were also active in acquiring AI companies. These five companies, collectively known as 'FAAMG,' have acquired a total of 60 AI companies. This is why criticism arises that Korea, a strong ICT nation that has declared its ambition to become the 'No. 1 AI country,' is relatively lagging behind in AI investment and related areas.

◇Full-Scale Discovery and Investment in AI Startups

However, it is noteworthy that domestic ICT conglomerates such as Naver and Kakao have recently made investments in promising AI startups, intensifying competition with global companies. Among the 52 domestic and overseas companies Naver invested in last year, 16 were AI-related companies. Specifically, these include Giant Step, a real-time content solution company based on AI (7 billion KRW), and HD Junction, a digital health solution company specializing in AI diagnostics (1 billion KRW). There have also been occasional acquisitions; for example, in 2017, Naver acquired Xerox Research Centre Europe (XRCE) located in Grenoble, France, from Xerox in the USA. XRCE is an advanced technology research center located on the outskirts of Grenoble, France, reminiscent of Silicon Valley in the USA. It mainly researches future technologies such as artificial intelligence, machine learning, computer vision, and natural language processing.

LG Electronics invested equity in AI sensor startup AI (4.496 billion KRW) for vehicles and AI processor design company X-Falcon (2.22 billion KRW). In December 2019, LG also invested 1.75 billion KRW in Growth Accelerate Fund, an AI venture capital fund of SoftBank Ventures, to discover promising AI startups. Kakao, through its investment subsidiary Kakao Ventures, made investments last year in AI semiconductor solution developer Rebellion and AI-based customized English conversation application service Plang.

Telecom companies such as SK Telecom and KT have raised the transition to AI companies as a key agenda but have yet to concretize AI company acquisitions or equity investments. A senior SK Telecom official said, "We are paying attention to and monitoring the AI agent sector." The AI semiconductor currently being developed under SK Telecom's leadership is also a major goal of the government's AI national strategy (aiming to be No. 1 in AI semiconductors).

◇Why AI... The Need for Bold National-Level Investment

AI is regarded as the 'key to the hegemony war' that will open the door to a super-intelligent society and change the global political, economic, and social paradigms. This is why AI industry promotion policies have remained unchanged even when the administration in the United States has changed. It means that AI is recognized as the core of the core responsible for the nation's future.

The Korean government, which has announced its AI national strategy, also judges that it is virtually impossible to leap forward as a strong AI nation without the support of domestic companies making large-scale investments. The obstacles currently hindering the adoption of AI by domestic companies include high costs, uncertainty, and manpower shortages.

According to last year's Global AI Index, Korea ranked 8th overall among 54 countries in terms of AI ecosystem level. When the United States, ranked first, is considered 100 points, Korea's overall score was only 31.7 points. The gap was also large compared to China, ranked second with 58.3 points. Korea scored below average in talent, operational environment, government strategy, and venture status categories.

The KDI Economic Information Center stated in a report, "The AI ecosystem is not functioning properly," and recommended, "Bold national-level investment is needed, where the government leads investment in areas difficult for the private sector to attempt, and then the private sector can actively utilize these efforts." According to the '2020 Government AI Readiness Index' by Oxford Insights, which compares AI technology levels by country, Korea ranked 7th.