Korea’s public sector has long struggled to integrate advanced AI tools due to strict data-security segregation. That barrier has now been broken. Upstage, one of Korea’s fastest-rising AI startups, has become the nation’s first approved provider of generative AI solutions for government use — signaling the beginning of a deeper, system-level shift in how the country modernizes its public administration.

Upstage Secures First-Ever Government Contract for Generative AI

Upstage announced on December 4 that it has officially registered its “Public AI Workspace” on the Public Procurement Service (PPS) Digital Service Mall, becoming Korea’s first generative AI solution provider for public administration.

Under this agreement, Upstage will supply the Generative AI Office Support Service to government ministries, municipalities, and public agencies. This marks the first time Korean civil servants will be able to use generative AI tools inside segregated or closed government networks, a structure previously required to maintain cybersecurity compliance.

The Public AI Workspace integrates Upstage’s proprietary large-language model (LLM) “Solar” with optical-character-recognition (OCR)-based document-processing technology. The platform allows users to upload HWP, Word, or PDF files for search, question answering, summarization, and information extraction — all within a secure, isolated environment.

Unlocking Generative AI in Segregated Public Networks

Until now, Korea’s public sector was unable to apply generative AI at scale because of network separation mandates introduced after repeated cybersecurity incidents in earlier decades. These rules, while vital for data protection, prevented cloud-based AI services from connecting to administrative networks.

To address this issue, the PPS launched a new “Generative AI Office Support Service” category within its Digital Service Mall in late 2025. The framework allows AI deployment inside restricted systems through vetted suppliers meeting high security and transparency standards.

Upstage’s registration as the first official supplier therefore represents a policy-level breakthrough — one that aligns with the Korean government’s broader goal of using AI to boost administrative efficiency and reduce manual documentation burdens.

Upstage on Responsible AI in Government

Upstage CEO Kim Sung-hoon emphasized the strategic importance of the deal, stating:

“This collaboration marks the point where world-class Korean generative AI begins full deployment in government operations. As a national AI company, Upstage will continue accelerating innovation across the public sector with safe and reliable technology.”

The company is currently demonstrating the Public AI Workspace at the 2025 Korea Government Innovation Expo in Cheongju Osong (Dec 3–5), giving officials hands-on access to AI features optimized for real administrative workflows.

Government Procurement Meets AI Commercialization

Amid its journey to reach Korea’s first generative AI IPO, Upstage’s entry into the PPS procurement system carries significance beyond one contract. It illustrates how public-sector digital transformation is becoming a testbed for enterprise-grade AI adoption in Korea.

Generative AI in government settings demands security assurance, data sovereignty, and explainability — areas where Korean AI startups like Upstage, Nota, and Mindslab have recently made major R&D investments.

By approving Upstage as its first vendor, the government signals a shift toward domestic AI solutions over imported platforms, reinforcing AI sovereignty as a pillar of Korea’s digital policy. It also positions the PPS Digital Service Mall as a potential model for secure AI procurement across the Asia-Pacific region.

The development also arrives at a pivotal moment for Korea’s digital policy landscape. Recent cybersecurity incidents, including the Coupang data breach and Upbit’s exchange hack, have exposed vulnerabilities that shook public confidence in digital governance.  Yet, even amid heightened caution, the government continues to advance its AI Transformation (AX) Program, accelerating its nationwide adoption of artificial intelligence.

Within that context, Upstage’s selection as the first government-approved generative AI provider carries symbolic and strategic weight. Its proprietary model Solar Pro 2, which recently ranked above GPT-4.1 in global benchmark evaluations, exemplifies how domestic AI innovation can compete at the world’s highest level. This milestone signals the government’s determination to balance security assurance and AI ambition as it pursues its goal of becoming a top-three global AI powerhouse.

The Next Chapter of Korea’s Public-Sector AI Transition

Upstage’s approval is not merely a business milestone; it marks a cultural and institutional opening for AI within Korea’s public sector. The move could catalyze further partnerships between AI startups and government bodies in defense, education, and municipal administration.

As public agencies begin experimenting with generative AI through verified domestic platforms, the next frontier for Korea’s innovation ecosystem may lie not just in building smarter models — but in embedding them into the machinery of public service itself.

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