SK Group, AWS join hands to build $5.13 billion AI data center, Korea's largest

SK Group and AWS are investing $5.13 billion to build Korea's largest AI data center in Ulsan, set to start operations by 2029, amid increasing demand for AI services and infrastructure challenges in the country.

President Lee Jae Myung, center, takes part in a commemorative ceremony with attendees during the launch event for the Ulsan AI Data Center, part of the “Korea AI Highway” initiative, at the Ulsan Exhibition and Convention Center on June 20. [JOINT PRESS CORPS]

SK Group has partnered with Amazon Web Services (AWS) to construct a 7-trillion-won ($5.13 billion) AI data center in Ulsan.

SK Group Chairman Chey Tae-won announced the investment size on June 20 during a groundbreaking ceremony at the Mipo National Industrial Complex of the southern city.

The planned facility, which will house 60,000 cutting-edge graphics processing units (GPUs), will be Korea’s largest AI-specialized data center. The site is scheduled to become operational by 2029 with a capacity of 103 megawatts.

President Lee Jae Myung, SK Group Chairman Chey, AWS Vice President of Infrastructure Prasad Kalyanaraman and Science and ICT Minister Yoo Sang-im attended the ceremony.

As demand for AI services soars, the ability to expand data center infrastructure has become a critical competitive edge. Alibaba Cloud said Thursday it had opened a second data center in Seoul, while LG U+ said in April it would invest 615.6 billion won to build an AI-specialized data center in Paju, Gyeonggi.

Despite skyrocketing demand, supply remains constrained. According to global consultancy McKinsey, global data center demand is expected to grow by up to 22 percent annually from 2023 to 2030, with AI-specific data centers projected to grow even faster — by 33 percent each year. Grand View Research estimates the global data center market will reach $437.3 billion by 2030.

Even in the United States, supply is falling short. In January, the U.S. government announced its largest-ever AI infrastructure initiative, the Stargate project. “Because it takes more than three years to build a data center, competition to invest is already intensifying,” said a source in the cloud industry.

Park Jin-hyo, left, president of SK Broadband, shakes hands with Prasad Kalyanaraman, vice president of infrastructure at Amazon Web Services (AWS), after signing an agreement to build the Ulsan AI Data Center at the launch event held at the Ulsan Exhibition and Convention Center on June 20. [JOINT PRESS CORPS]

Korea’s infrastructure gap

According to research firm Statista, Korea currently has only 43 data centers — far behind the United States with 5,426, Germany with 529 and China with 449. This disparity is one reason the Korean government is promoting its “AI Highway” vision, which calls for data centers in strategic locations nationwide.

However, building AI data centers in Korea has been difficult due to challenges securing electricity and GPUs, as well as local government approval processes. In 2019, Naver had to relocate its planned data center from Yongin, Gyeonggi, to Sejong due to resident opposition.

By partnering with the Ulsan Metropolitan Government and selecting the Mipo site, SK is seen as making an optimal choice. The nearby LNG cogeneration plant operated by SK Gas is expected to facilitate the power supply.

“Electricity supply is a chronic issue in the data center industry,” said Kim Soo-hyun, a senior researcher at the Korea Data Center Alliance. “Public opposition, with residents viewing these as undesirable facilities, is also a major obstacle.”

Kwon Yong-hyun, executive vice president and head of corporate division at LG U+, right, and Jayanth Nagarajan, head of telecom industry for Asia Pacific & Japan at Amazon Web Services, pose for the photo at the MWC25 trade show in Barcelona, Spain. [LG U+]

Government to consider expanding tax credits

Following the ceremony, a roundtable on global AI cooperation was held with participation from domestic AI players, including Kakao, Naver Cloud, LG AI Research and FuriosaAI. Participants discussed ways to enhance Korea’s global AI competitiveness and called for stronger policies to foster an ecosystem for developing proprietary foundation models.

The government hopes this initiative will accelerate Korea’s broader transition to AI. It is now considering expanding tax credits for investments in AI data centers and has pledged further support for developing indigenous foundation models.

The Ministry of Science and ICT said it would soon select up to five elite teams to take part in a national “AI Foundation Model” project, with the goal of achieving performance levels equal to or exceeding 95 percent of leading global models. Selected teams will receive access to 10,000 GPUs secured through a supplementary budget. Companies expected to compete for the project include LG AI Research, Naver, NC AI, Konan Technology, Upstage and ESTsoft.

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff. BY KANG KWANG-WOO, OH HYEON-WOO [kim.minyoung5@joongang.co.kr]