'Stock Price Bottom' NAVER Targets Global Market with 'Sovereign AI Business' Strategy

[Korea Financial Times, Kim Jaehun] NAVER (CEO Choi Soo-yeon) is strengthening its global market penetration with a 'Sovereign AI' strategy that ensures diversity in each country. The strategy is to gradually speed up the pace after winning an AI cooperation project in Saudi Arabia. As NAVER's stock price is currently struggling with stagnant growth in its main businesses such as search and commerce, many are wondering if it will be a springboard for a rebound.

On the 13th, NAVER recently signed an MOU with the Saudi Data and Artificial Intelligence Agency (SDAIA), which organizes AI in Saudi Arabia, after attending the Global AI Summit, a representative AI conference in Saudi Arabia.

With this MOU, NAVER will cooperate in a wide range of AI, cloud, data center, and robotics fields. Specifically, NAVER, NAVER CLOUD PLATFORM, and NAVER LABS will collaborate on ▲ data center-related solutions and services being prepared by SDAIA, ▲ cloud solutions based on them, ▲ the development of Arabic-based LLM and related services, and ▲ research and development of intelligent robots and related application services.
This AI business cooperation is the second success after winning the Digital Twin project in Saudi Arabia last year. It involves the development of an Arabic version of LLM (large-scale language model) as well as the export of NAVER's AI technology infrastructure, including data centers and clouds, to Saudi Arabia. Analysts say that this has laid the foundation for Naver's Sovereign AI strategy.

Sovereign AI is NAVER's strategy to protect AI sovereignty in response to the massive AI technology offensive by the United States and China. In particular, the main goal is to play a role in AI technology leadership initiatives by developing AI models that more strongly reflect the culture and values of each region in cooperation with the government and companies.

“Lee Hae-jin, Naver's GIO, said at the AI Seoul Summit in May, "If a very small number of AI dominates the present, the recognition of the past history and culture will be made only by the AI's answer, and eventually, the AI will have a big impact on the future." "From this point of view, there should be many AI models that show various perspectives and understand the cultural and environmental context of each region."

In addition, he said, “NAVER will continue to support, in one form or another, the development of diverse AI models that respect and understand local cultures and values, and that are responsible, so that many global countries can have their own Sovereign AI.”

The achievement of the Sovereign AI strategy marks a critical juncture for NAVER in terms of securing the company's future. NAVER is on track to post its best quarterly results since 2022, when CEO Choi Soo-yeon took over. In the 2nd quarter of this year, the company beat market expectations with revenue of KRW 2.61 trillion and operating profit of KRW 472.7 billion, up 8.4% and 26.8% year-on-year, respectively.

However, NAVER's stock price has been sluggish. The stock price, which was close to KRW 450,000 when Choi took over, is currently hovering around KRW 150,000. This is due to a slowdown in the growth of NAVER's core businesses of search, commerce, and content. NAVER's revenue growth, which had been growing at around 20% every quarter, fell to single digits in the second quarter of this year.



This is a crucial time for NAVER to generate results from its AI business, which has been touted as a future growth engine. “We will focus on accelerating the enhancement of core business products and platforms by utilizing AI and data, and proactively discovering new business opportunities based on technology,” Choi Soo-yeon said on the company's Q2 earnings call.

In fact, Naver's management is also scrambling to expand its AI business through the Sovereign AI strategy. The Global AI Summit in Saudi Arabia was also attended by GIO Lee Hae-jin and CEO Choi Soo-yeon, CEO Chae Sun-joo, CEO of External and ESG Policy, Kim Yoo-won, CEO of NAVER Cloud, and Seok Sang-ok, CEO of NAVER Labs.
During the visit, Team NAVER's delegation, including GIO Lee Hae-jin, met with key officials from Saudi Arabia's government ministries, including the Minister of Autonomous Affairs and Housing Majed Al Hogail, the Minister of Communications and Information Technology Abdullah Alswaha, the Minister of Commerce Majid Al Kasabi, and the Director General of Data and Artificial Intelligence Abdullah Algamdi.

In her keynote at the Global AI Summit, NAVER Cloud CEO Yoo Won Kim expressed the growing importance of AI sovereignty and NAVER's willingness to help Saudi Arabia open a new chapter in the AI era based on its unrivaled AI technology capabilities and experience.

In addition, Ms. Choi will be participating in Mobile 360 Asia Pacific, which will be held in Seoul next month on the 1st and 2nd, to introduce NAVER's AI strategy. The event is organized by the World Mobile Operators Association and brings together telecommunications and related industry experts from the Asia-Pacific region to discuss current issues such as next-generation mobile communications, and this year's theme is how to develop a digital nation through AI.

Kim Jaehun (rlqm93@fntimes.com)