Naver Cloud has decided not to make a second attempt in the Ministry of Science and ICT’s “independent AI foundation model” project. With a leading candidate dropping out, the industry appears to be raising expectations for an additional selection.

Naver Cloud said on Jan. 15, “We respect the government’s judgment, and we will continue wide-ranging efforts to enhance AI technology competitiveness.” It added, “We are not reviewing” a second attempt.

Naver Cloud was eliminated in the first-stage evaluation of the project along with NC AI. Unlike NC AI, Naver Cloud cleared the benchmark evaluation hurdle but failed to meet the criteria for originality.

Naver Cloud put forward its independent model, “HyperCLOVA X Seed 32B Think.” After its release, it faced criticism that its vision encoder was similar to Alibaba’s open-source AI, “Qwen 2.4.” Naver Cloud also acknowledged using Qwen’s vision encoder.

The government ultimately viewed Naver Cloud’s use of the vision encoder weights as a reason it did not meet the originality requirement. An interpretation has emerged that changing the model and trying again would have been a burden for Naver Cloud in this situation.

The industry is instead viewing it as an opportunity. The ministry’s original policy was to eliminate only 1 team in this evaluation and conduct a second-stage review of 4 teams. But with only 3 teams remaining, it decided to additionally select 1 elite team.

If Naver Cloud, seen as a leading candidate, gives up on a second attempt, that increases the likelihood that other companies’ AI models will be selected. It was welcome news for KT, Kakao, Motif Technologies, Konan Technology and the Korea Advanced Institute of Science and Technology (KAIST), which did not make the initial group of 5 elite teams.

An official at one company that sought selection as an elite team in the first stage said, “We did not expect at all that a slot would open up until the government announcement.” The official added, “We will decide whether to try again after assessing the conditions for the additional call and the company’s situation.”