TLDR: Korean startups are strategically leveraging specialized Artificial Intelligence (AI) to establish dominance in niche markets, including manufacturing, medical, and defense sectors, aiming for global competitiveness where general-purpose AI lacks specific industry knowledge.
Korean artificial intelligence (AI) corporations are rapidly expanding their reach into overseas markets by focusing on industry-specific AI solutions. While the general-purpose AI market is largely dominated by U.S. and Chinese tech giants like OpenAI, Google, and Anthropic, the specialized, or ‘vertical AI,’ market presents a significant opportunity for Korean companies, as it currently lacks a clear global leader. Experts suggest that by concentrating on sectors where Korea already possesses strengths, such as manufacturing and content, the nation can significantly enhance its global competitiveness in AI.
Demand for vertical AI, which is tailored for specific industries like manufacturing, defense, medical, logistics, legal affairs, and finance, is on the rise. Unlike general-purpose AI, which, despite its broad knowledge, often lacks the specialized understanding and accuracy required for specific business processes, vertical AI offers customized solutions directly addressing corporate needs. The global vertical AI market, valued at $10.2 billion (approximately 14.2 trillion won) last year, is projected to grow at an impressive average annual rate of 21.6%, reaching an estimated $69 billion (approximately 96.5 trillion won) by 2034.
Several Korean startups are already making significant strides in this domain. MakinaRocks, a leader in manufacturing AI, provides an AI platform called ‘Runway’ that facilitates real-time detection of equipment anomalies, process optimization, and predictive maintenance for industrial robots, leading to enhanced efficiency and reduced maintenance costs. In the medical field, Lunit has developed Korea’s first medical-specific ‘AI foundation model.’ The company has seen remarkable growth, with sales increasing by 116% to 54.2 billion won last year, with approximately 80% of its revenue generated from overseas markets. Agtech startup Tridge utilizes its proprietary AI technology to analyze data related to agricultural, livestock, and fishery products, offering a data platform to major retail companies such as Walmart, Costco, Dole, Del Monte, and Emart. Last year, Tridge generated about 43.4% of its 42 billion won in revenue from international operations.
Another notable example is S2W, a South Korean cybersecurity startup, which in March signed a contract to export its AI-based cyber threat analysis and alert service to a Japanese government agency. This marks its fourth overseas deal, following agreements with a Taiwanese company and government agencies in Indonesia and Singapore. S2W has pioneered the world’s first AI technology specifically designed for the dark web, providing a service that collects dark web data and assesses potential security threats to organizations. The company reported that approximately 24% of its 10 billion won revenue last year came from overseas, representing a sixfold increase in export value. This success is partly attributed to South Korea’s geopolitical position, which has provided S2W with strong data coverage and analysis capabilities related to cyberattacks from North Korea, China, and Russia.
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The Ministry of SMEs and Startups (MSS) in South Korea has also launched the “AI Core Areas and Promising AI Transition (AX) Startup Development Program” as part of its “Super-Gap Startup 1000+ Project.” This initiative aims to foster high-growth AI startups by providing financial and infrastructure support, including access to GPU-based computing resources and validation centers. The program will select five high-growth AI startups in key sectors like Small Language Models (sLLM), manufacturing AI, bio AI, and content AI, offering up to KRW 150 million for commercialization. Additionally, 15 AI transition startups will receive KRW 80 million in collaboration funds and support for new sales channels to integrate innovative AI technologies into manufacturing, bio, and content sectors. These efforts underscore Korea’s commitment to becoming a leader in the specialized AI market.
