Shinsegae joins hands with Reflection AI to build AI data center in Korea

(Shinsegae Group)

Shinsegae Group will build a large-scale artificial intelligence (AI) data center in South Korea as it seeks new growth engines beyond retail.

The conglomerate said on Monday that it signed a memorandum of understanding with Reflection AI Inc. in San Francisco, the United States, to develop a 250-megawatt AI data center. It would be the largest project of its kind in Korea and more than six times the size of typical facilities.

Shinsegae Group did not disclose exact investment amounts, but industry analysts estimate it will range between 10 trillion won ($6.7 billion) and 20 trillion won.

The data center will feature graphic processing units from Nvidia Corp. and the companies plan to form a joint venture within the year to operate the business.

The partnership is the first under the U.S. government’s American AI Exports Program. The MOU signing ceremony was held in the U.S. Department of Commerce’s National AI Center and was joined also by U.S. Secretary of Commerce Howard Lutnick.

Reflection AI was founded by Chief Executive Officer Misha Laskin, formerly of Google DeepMind, and Chief Technology Officer Ioannis Antonoglou, a key developer of AlphaGo. The company focuses on open-weight AI models, which disclose core parameters so users can modify them for specific purposes. That approach offers greater control than closed models such as OpenAI’s ChatGPT, Google LLC’s Gemini and Anthropic PBC’s Claude, allowing governments and companies to tailor systems to local data and regulations.

Valued at about $8 billion, Reflection AI raised $2 billion last year from investors including Nvidia, securing stable GPU supply, according to industry estimates.

“The project will underpin future growth and help advance Korea’s AI ecosystem,” said Shinsegae Chairman Chung Yong-jin.

Laskin noted that the partnership will support Korea’s independently developed AI infrastructure.

Shinsegae will oversee land acquisition and construction, while Reflection AI will develop software for operations. The exact site has not been finalized but analysts predict it will likely be outside the Seoul area due to high power requirements.

The facility will operate as a full-stack AI infrastructure, providing cloud services and customized AI solutions. The model integrates infrastructure, technology and software, enabling clients to deploy AI systems immediately, unlike conventional data centers that provide only infrastructure or platforms.

“The project will help build sovereign AI to protect Korea’s data autonomy,” said a Shinsegae official.

The move, in the meantime, marks a shift for Shinsegae, which has long focused on department stores and supermarkets, into the AI cloud market. With domestic retail growth slowing, the conglomerate is positioning AI and information and technology infrastructure as new growth engines.

Data centers generate revenue by leasing server infrastructure. Shinsegae’s full-stack model is expected to add income from AI technology and operations. The conglomerate also aims to strengthen its position in AI shopping agents, where Naver Corp. is a leading player.

Shinsegae Group’s revenue rose marginally from 40.6 trillion won in 2023 to 40.98 trillion won last year.

With limited growth in retail, the conglomerate aims to combine its physical assets, commerce data and customer base with AI to develop new businesses, including AI agents that manage shopping from product selection to payment and delivery, and automation across logistics and distribution to improve efficiency and profitability.