Fostering 'Korean Palantir': Core Details of the 10 Trillion Won Fund and AI Data Beneficiary Outlook

The government has rolled up its sleeves to foster a 'Korean Palantir' that will lead innovation in defense AI and data. It plans to create a fund worth up to 10 trillion won over the next five years to nurture five unicorn companies with a corporate value of over 1 trillion won by 2030. This is evaluated as a key starting point for shifting the paradigm of K-defense from hardware to software and data-centric models.

Establishment of 'Korean In-Q-Tel (IQT)' Modeled After the US CIA

The core of this strategy is the establishment of a 'Korean In-Q-Tel', benchmarking the venture capital arm of the US Central Intelligence Agency (CIA). The state will directly invest in early-stage technology development funds, and actively utilize fund of funds and defense funds to support the scale-up of private innovative companies during their growth stages. It also plans to promote the acquisition of future original technologies and active M&As through a technology-specialized asset management company, 'Korea Strategic Technology Partners'.

Five New Security Strategic Sectors and Beneficiary Industries

The government has designated five new security strategic sectors for intensive nurturing: ▲Drones and Robots ▲Defense AI and Semiconductors ▲Defense Sensors and Future Materials ▲Aerospace ▲Cyber Security and Quantum Communication. In particular, with the introduction of the 'Advanced Technology Acquisition System' that shortens the deployment period of advanced weapon systems to within one year, and the US-style rapid contracting method 'OTA (Other Transaction Authority) type R&D', order opportunities for private AI data companies possessing related technologies are expected to explode.

Movements in the Investment Market: Focus on AI and Security Stocks

The stock market is reacting quickly to the news of the 10 trillion won fund creation. Buying trends are spreading not only to existing leading defense stocks but also to small and medium-sized innovative companies equipped with technological capabilities such as big data analysis, image recognition AI, and quantum cryptography communication. As the institutional foundation is laid to increase private access to military data, AI software companies that can expand their business areas from B2B to B2G (Business-to-Government) are considered the biggest beneficiaries.

Related FAQ

• Q. What kind of company is Palantir?
  It is an American big data analysis company that grew by having government intelligence agencies, such as the CIA, as its main clients. It analyzes vast amounts of data to hunt down terrorists or predict battlefield situations, and is known as the synonym for AI in the military and security fields.
• Q. Is this bad news for existing defense companies?
  No. Rather, it is highly likely that existing hardware-centric defense companies will collaborate with or acquire strong small companies possessing innovative AI software technologies, which can act as a favorable factor to enhance the overall global competitiveness of K-defense.
• Q. How should I find related stocks?
  Rather than simple theme stocks, it is important to select performance-based companies that have a history of actually carrying out government national projects in the five new security strategic sectors such as defense AI, cyber security, drones, and aerospace, or that possess their own independent data analysis platforms.