KOTRA's $210 million project to establish an AI trade investment platform has been halted just one day before the proposal deadline. Despite efforts to open the project to major corporations, the initiative has reverted to square one due to rising semiconductor prices.
According to the IT industry on July 13, KOTRA announced the suspension of the 'KOTRA Intelligent Trade Investment Platform' project on July 6, just a day before the proposal submission deadline on July 7.
The project aimed to integrate seven systems currently operating separately, including Trade Investment 24, Buy Korea, and Invest Korea, and to implement a customer data platform (CDP) based on generative AI, large language models (LLM), and retrieval-augmented generation (RAG). The total project cost was set at 210 billion won, with a duration of 30 months, and the request for proposals (RFP) was published on May 15.
The project faced controversy from the outset. Under Article 48 of the Software Promotion Act, companies belonging to conglomerates like Samsung SDS are generally prohibited from bidding on public software projects. However, KOTRA designated this project as an 'other security' initiative unsuitable for private service, allowing major corporations to participate. Concerns were raised in the industry that this could signal a shift toward a conglomerate-centric public software procurement market.
KOTRA stated, "We are not canceling the project, but due to the recent rise in semiconductor prices, the cloud usage fees necessary for system operation have increased beyond initial expectations, creating a situation where the project contractor could incur losses. We plan to realistically adjust the project costs and tasks and reissue the proposal."
According to market research firm DRAM Exchange, the fixed transaction price for 8-gigabit (Gb) DDR4 DRAM for PCs rose from $20 in May to $21 in June, with spot market prices reaching $36.10 on July 1. Server DRAM prices are estimated to have increased by about 20% in the second quarter.
However, industry insiders cite the withdrawal of Samsung SDS from the bidding as the primary reason for the project's cancellation. Other major companies, including LG CNS, also reportedly declined to participate early on. For large corporations, the profitability of a 210 billion won project was not substantial, and the rising costs due to semiconductor price surges, coupled with the potential public backlash over 'disrupting the small and medium enterprise market,' added to the reluctance.
In response, KOTRA emphasized, "The decision to lift the restrictions on major corporations was made through proper procedures for other security reasons, and it was not intended to favor any specific company. This action was taken to prevent harm to both the issuing agency and the contractor."
Nevertheless, the impact has fallen on small and medium enterprises that were preparing proposals up until the day before the deadline. Typically, public software projects of this scale require significant investment in pre-consulting and proposal preparation, often costing companies tens of millions of won. Those who had nearly completed their proposals now face the loss of their invested costs.
The rationale for the project has also lost its significance. KOTRA had cited the complexity of the current system and the difficulty of integrating AI as the purpose of the consolidation project. With the project indefinitely postponed, the transition of the trade investment platform to AI has also come to a standstill.
A representative from a mid-sized company that was preparing to bid stated, "Many small and medium enterprises formed a consortium to bid on the 210 billion won budget and spent significant amounts on proposal preparation. If the project budget is an issue, KOTRA could have held another briefing to adjust the budget realistically. This unilateral cancellation notice without discussion is unacceptable."
* This article has been translated by AI.
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