AI Moment for the U.S.-ROK Alliance

Winning the AI race is no longer about inventing better models. It is about turning AI into national power. The United States leads AI innovation through world-class companies such as Anthropic, OpenAI and NVIDIA and a dynamic research ecosystem, but it faces structural weaknesses resulting from the erosion of parts of its manufacturing base. China, by contrast, leverages its vast manufacturing capacity and state-led industrial policies to rapidly diffuse AI throughout industry and society. Amid this strategic competition, South Korea is emerging as a pivotal country capable of connecting American innovation with real-world deployment through its strengths in semiconductors, advanced manufacturing, and digital infrastructure. Korea's role is becoming increasingly important in such areas as high-bandwidth memory (HBM), AI data centers, batteries, nuclear energy, robotics, and defense industries. Accordingly, the U.S.–ROK alliance should evolve beyond a traditional military alliance into a broader technology alliance encompassing AI, semiconductors, energy, and other advanced technologies. By doing so, the United States can reaffirm its global leadership in sustaining the liberal international order in the age of artificial intelligence.

From Innovation to Power

In the wake of ROK President Lee Jae Myung’s participation in the San Francisco AI Summit from July 24-25, the imperative for Washington and Seoul is no longer simply advancing technological breakthroughs, but scaling them into durable national power. Today, one frequently hears the question: Which country will win the AI race, the United States or China? Yet this question often obscures the true nature of the competition. Many people view the rivalry between the United States and China simply as a technological race to determine which country will first achieve artificial general intelligence (AGI). In reality, however, the essence of AI competition lies not in the technology itself but in the ability to transform that technology into national power.

AI must ultimately be embodied in semiconductors, supported by data centers, and deployed throughout factories, logistics networks, military platforms, and urban infrastructure. AI competition is therefore not only a competition in algorithms but also in manufacturing, supply chains, and institutions. In other words, AI competition is fundamentally a competition among systems rather than technologies. 

By contrast, the United States and China differ fundamentally in the way they approach AI competition. The U.S. strategy is centered on innovation. Today, the United States is unquestionably the global leader in AI innovation. World-leading AI companies—including OpenAI, Google DeepMind, Anthropic, Microsoft, Meta, and NVIDIA—are based in the United States, and the country continues to maintain an overwhelming advantage in the development of cutting-edge large language models and AI algorithms.

America's greatest strength lies not only in its ability to develop AI models. Equally important is its advanced AI semiconductor ecosystem, led by NVIDIA and other big-tech companies, and its unparalleled capacity to build hyperscale data centers. Together, these provide the essential foundation that makes AI innovation possible. In today's AI competition, computing power has become a strategic asset comparable to coal and steel during the Industrial Revolution. The United States also enjoys significant advantages in attracting global talent, maintaining an open research ecosystem, and fostering venture capital investment.

Much of the AI debate in the United States focuses on artificial general intelligence (AGI), with particular attention devoted to which country will first achieve human-level machine intelligence. This perspective, however, presents three important problems. First, there is still no universally accepted definition of AGI. Second, even if the United States were to achieve AGI several months ahead of China, such an accomplishment would not necessarily guarantee strategic victory. Third, it may be mistaken to regard AGI itself as the ultimate finish line of AI competition. Technology does not become strategically meaningful simply because it has been invented. It acquires strategic significance only when it is implemented in the real world.

It is precisely at this point that the United States faces a structural weakness. Although it remains the world's leading innovation power, much of its manufacturing base has diminished over time. Software alone is insufficient to transform the AI revolution into real-world power. AI must ultimately be embodied in semiconductors, data centers, robots, smart factories, autonomous systems, and unmanned military platforms. In other words, AI must be diffused into the physical world. Yet the United States faces limitations in this stage of physical deployment.

China, by contrast, has adopted an entirely different approach. Beijing does not view AI competition primarily as a race to achieve AGI. Instead, its focus is on how rapidly existing AI technologies can be applied throughout manufacturing, urban infrastructure, government administration, surveillance systems, and military platforms. In other words, China's strategy emphasizes diffusion rather than innovation. China's comparative advantage lies in possessing the world's largest manufacturing base. This advantage is reinforced by vast quantities of data, long-term state investment, and the government's strong capacity to implement industrial policy.

As Michael Froman, President of the Council on Foreign Relations, has argued, the AI race is not simply about which country develops the most advanced AI model first. Rather, as technology scholar Jeffrey Ding emphasizes, long-term competitiveness is likely to depend on how effectively AI technologies are diffused and applied throughout industry and society. 

China is therefore less concerned with possessing the world's most advanced AI model than with maximizing the extent to which AI enhances productivity and strengthens national capacity. This explains why China has rapidly deployed AI across areas such as smart factories, smart cities, autonomous logistics, digital governance, and unmanned military systems. China nevertheless faces important constraints. U.S. export controls continue to restrict its access to advanced semiconductors. In addition, China's authoritarian political system limits international trust and weakens its competitiveness in establishing global norms. The Chinese model of AI governance is unlikely to become one that other countries voluntarily seek to adopt.

Ultimately, AI competition is not merely a technological race. It should instead be understood as a comprehensive competition encompassing innovation and diffusion, manufacturing and supply chains, and institutions and governance.

Why Korea Matters

The structural differences between the United States and China make it difficult to predict a clear winner in the AI competition. Rather than one side achieving decisive dominance, it is more likely that two competing technological ecosystems—one centered on the United States and the other on China—will coexist. Countries will continue to compete and cooperate within their respective supply chains and technological standards.

Should this scenario unfold, the strategic importance of middle powers is likely to increase rather than diminish. Countries that possess both advanced manufacturing capabilities and technological sophistication will emerge as critical links connecting the two technological blocs.

It is precisely at this point that the strategic value of the Republic of Korea deserves renewed attention. In the AI era, South Korea is not simply a country forced to choose between the United States and China. Rather, it is one of the very few nations capable of bridging America's strengths in technological innovation and China's demonstrated capacity for large-scale manufacturing and diffusion.

South Korea possesses one of the world's most advanced semiconductor industries. Its capabilities in advanced manufacturing, digital infrastructure, and information and communications technology are likewise among the world's best. At the same time, Korea's democratic political system, market economy, and commitment to the rule of law enable it to maintain close cooperation with the United States and other liberal democracies. These characteristics distinguish Korea's potential role in the AI era.

At the center of today's AI industry lies HBM, and Korean companies are global leaders in this field. Likewise, AI servers, hyperscale data centers, advanced semiconductor packaging technologies, future humanoid robots, and physical AI systems cannot be realized without the manufacturing capabilities that Korea has developed over decades. If the United States serves as the brain of the AI revolution, South Korea provides much of its body. Strategic competition in the AI era cannot be won through software alone. National competitiveness will ultimately depend upon combining technological innovation with the industrial capacity to deploy it in the real world.

This carries profound strategic implications. Although the United States leads the AI revolution, it cannot secure victory on its own. Transforming AI into economic and military power requires a strong manufacturing base and resilient supply chains. This is precisely why Washington increasingly emphasizes cooperation with its allies.

Accordingly, South Korea's strategy toward the United States should move beyond traditional technological cooperation. Korea should position itself as a key strategic partner capable of complementing the structural weaknesses of America's AI strategy. By deepening cooperation in semiconductors, advanced manufacturing, batteries, nuclear energy, robotics, and defense industries, South Korea can become an indispensable component of the U.S.-led AI ecosystem.

The diffusion of AI requires more than semiconductors alone. Operating hyperscale data centers and AI factories demands a stable, abundant, and affordable supply of electricity. Consequently, nuclear power, electric grids, and energy storage systems are emerging as critical infrastructure in AI competition. As one of the few countries possessing internationally competitive capabilities in the construction and operation of nuclear power plants, South Korea can also play an important strategic role in ensuring energy security in the AI era.

AI Moment for the U.S.–ROK Alliance

Today, the United States remains the global leader in innovation. China is accelerating the diffusion of AI throughout its economy and society. South Korea, meanwhile, is an indispensable nation capable of connecting innovation with diffusion. That is the AI moment for the U.S.-ROK alliance. Washington must treat AI not merely as a technology sector but as a central pillar of alliance strategy. Moving forward, the partnership must be operationalized through three key pillars:

First, the two governments should expand the U.S.–ROK alliance to include a permanent AI, Energy, and Semiconductor Dialogue co-chaired by the U.S. National Security Council and the South Korean Presidential Office. Its focus must remain operational: clearing infrastructure bottlenecks, coordinating investments, and protecting supply chains. 

Second, the two governments should build a joint industrial agenda across semiconductors, cloud infrastructure, robotics, and shipbuilding. South Korea’s world-class nuclear energy sector should also be integrated directly into the alliance’s digital agenda, driving joint work on small modular reactors, grid resilience, and clean-powered data infrastructure. 

Third, the U.S. and South Korea must lead the way in establishing democratic AI standards. While authoritarian AI focuses heavily on surveillance and state control, Washington and Seoul should pioneer a model that seamlessly blends rapid technological innovation with open markets, democratic accountability, and trusted infrastructure. 

In the tech war with Beijing, Washington cannot secure victory alone; it requires Seoul’s unparalleled hardware and industrial ecosystem to outpace Chinese consolidation. By strengthening its technology alliance with South Korea, the United States can reaffirm its global leadership in sustaining the liberal international order in the age of artificial intelligence. 

Sung-han Kim is Adjunct Senior Fellow at the Asan Institute for Policy Studies; Professor Emeritus of International Relations at Korea University; and Chief Executive Director at Institute for Economy, Technology, and Security (IETS) in Seoul, Korea. He served as the ROK National Security Advisor in 2022-23 and Vice Minister of Foreign Affairs and Trade in 2012-13.