Good morning.
Today's briefing examines the tectonic shifts in global AI strategy, from national industrial policy to corporate vertical integration. We'll explore a landmark partnership that positions South Korea at the forefront of 'physical AI' through a massive commitment to Nvidia's hardware. We also track Apple's strategic move to manufacture its own AI servers, OpenAI's relentless platform expansion into the enterprise, and the high-stakes valuation debates defining the future of AI infrastructure providers.
National Strategy. Nvidia is solidifying its role as a key enabler of national AI ambitions through a landmark partnership with South Korea, announced at the APEC Summit 2025. The collaboration involves a commitment from South Korea to acquire over 260,000 of Nvidia's latest GPUs, with major industrial players like Samsung and Hyundai set to receive the bulk of the hardware. This initiative is designed to enhance the nation's artificial intelligence infrastructure and 'physical AI' capabilities, signaling a strategic government-led push to integrate advanced AI directly into its core manufacturing, robotics, and semiconductor industries for long-term economic competitiveness.
Vertical Integration. Apple is taking significant steps to control its AI technology stack, with CEO Tim Cook confirming the company has started manufacturing its own AI servers. During the Q4 2025 earnings call, Cook revealed that a new facility in Houston is now producing the servers essential for Apple Intelligence, its proprietary cloud processing system. This move underscores a long-term strategy to reduce reliance on third parties for critical infrastructure, ensure privacy through its Private Cloud Compute framework, and build a vertically integrated ecosystem that deeply embeds its own foundational models into its hardware and software.
Platform Expansion. OpenAI continues its aggressive push to embed ChatGPT into every facet of digital life, reporting massive user growth and a suite of new enterprise-focused features. The company has surpassed 800 million weekly active users and has significantly expanded the capabilities and market penetration of its platform throughout 2025 with the launch of GPT-5 and new tools like ChatGPT Atlas. By enabling search across workplace data from Slack and Google Drive and integrating direct e-commerce functions, OpenAI's strategy is clearly aimed at moving beyond a simple chatbot to become an indispensable, foundational platform for both consumer and corporate productivity.
Infrastructure Valuation. The intense competition and soaring valuations within the AI infrastructure market were highlighted as Core Scientific shareholders voted to reject an all-stock acquisition offer from competitor CoreWeave. The rejection, spearheaded by a major shareholder, was based on the belief that the offer undervalued the company's independent growth potential in a rapidly expanding market. This decision, made by a company that only recently emerged from bankruptcy, underscores the extreme confidence investors have in the long-term value of data center capacity and specialized hardware for AI workloads, suggesting that strategic M&A in this sector will face high valuation hurdles.
Deep Dive
The partnership between Nvidia and South Korea represents a new chapter in national industrial strategy, moving beyond abstract AI policy to the concrete implementation of 'Physical AI.' This concept refers to the deep integration of artificial intelligence directly into tangible industrial processes like manufacturing, robotics, and logistics. For a nation like South Korea, whose economy is built on advanced manufacturing and technology exports, this is not just an upgrade but a necessary evolution to maintain a competitive edge in a world where industrial efficiency and innovation are increasingly driven by intelligent systems.
The scale of the commitment is immense, with over 260,000 GPUs set to power this transformation. The plan details a comprehensive industrial overhaul: Samsung will build an 'AI Megafactory' using 50,000 GPUs to create an intelligent network for optimizing semiconductor production; Hyundai will leverage 50,000 GPUs to advance autonomous driving and smart factories; and Naver Cloud will create a 'Physical AI' platform to connect digital and physical environments across shipbuilding, energy, and biotech. As Naver founder Hae-jin Lee stated, "the era of 'Physical AI,' where AI operates directly within real industrial sites and systems, is unfolding," crystallizing the partnership's strategic intent.
The long-term implications of this model are profound. It positions Nvidia not just as a component supplier but as a foundational partner in shaping national economic futures, a role that gives it unprecedented influence. For South Korea, this is a strategic hedge, ensuring its key industries are powered by state-of-the-art AI to drive the next wave of productivity and innovation. This blueprint for a public-private AI industrial strategy is likely to be emulated by other nations, intensifying the geopolitical competition for access to critical AI hardware and expertise while accelerating the fusion of AI with the physical economy.
