Naver founder and global investment officer Lee Hae-jin, back row left, applauds with Saudi Data & AI Authority (SDAIA) President Abdullah Alghamdi, back row center, after SDAIA and Naver officials signed an MOU on their partnerships at the Global AI Summit in Riyadh, Sept. 10. Courtesy of Naver

Naver will set up a Middle East unit in Saudi Arabia by the end of this year as the Korean internet service giant explores business opportunities in artificial intelligence (AI), digital twin and other national digitization projects being pursued by Arab nations.

According to Naver, Monday, the unit, tentatively called Naver Arabia, will be based in Saudi Arabia, serving as the company's regional headquarters in the Middle East.

To facilitate this, Naver will join Saudi Arabia's Regional Headquarters (RHQ) Program, a support initiative led by the Ministry of Investment and the Royal Commission for Riyadh City to attract and accommodate the regional headquarters of global companies.

In the process, Naver will collaborate with partners on Saudi Arabia's national technology projects, aiming to explore a range of business opportunities within the sector.

Naver also said it is in discussions with various local partners to establish several joint ventures in projects currently being pursued by the Saudi Arabian government.

Naver did not disclose its partners, saying that its efforts are still in the early stages. However, there is growing speculation that it may collaborate with Saudi Arabia's Ministry of Municipalities and Housing, as well as the National Housing Company, both of which are involved in the country's digital twin platform project.

Naver CEO Choi Soo-yeon introduces the company's HyperCLOVA X artificial intelligence agent during a press conference in Gangnam District, Seoul, Aug. 24, 2023. Courtesy of Naver

Naver signed a deal with the Saudi Arabian government in October last year to create a digital twin platform for Riyadh and four other cities. Digital twin refers to a technology mirroring real-world entities in a virtual environment.

In addition to the digital twin platform, Naver's regional headquarters is expected to serve as the hub for its partnership with Saudi Arabia in developing the country's sovereign AI. AI sovereignty refers to a nation's ability to create AI services using its own infrastructure, language, data, workforce, and business networks.

On Sept. 12, Naver and its affiliates signed a memorandum of understanding with the Saudi Data & AI Authority to cooperate in various sectors, including AI, cloud computing, data centers and robots.

Under the MOU, both sides plan to collaborate in the development of an Arabic large-language model (LLM), along with technology solutions and services in related fields.

Naver has been stressing the importance of sovereign AI, warning that the global expansion of generative AIs powered by LLMs developed by tech giants in the U.S. and China could threaten the technological sovereignty of other countries. In line with this perspective, Naver has been promoting its own Korean-based LLM, HyperCLOVA X, as a key example of maintaining technological autonomy.

As Naver is expected to apply the technology behind HyperCLOVA X to develop the Arabic LLM, industry experts believe there is a strong likelihood that Naver will expand its presence beyond Saudi Arabia into other Arab nations.

"Following the collaboration in the digital twin platform, full-scale cooperation in the development of sovereign AI with Saudi Arabia marks another milestone," a Naver official said. "Starting from the Middle East, Team Naver's technology-based businesses are expected to expand their global reach."