South Korea Eyes Global AI Hub Status as Hyperscale Data Center Boom Gains Speed

SK Telecom, KT and LG Uplus lead telecom investment

Hyperscale facilities are planned nationwide

Ultra-low latency and modular construction drive new projects

Samsung SDS and LG CNS expand data center businesses

SK, GS and Naver join government-backed $397.4 billion plan

Investment in AI data centers, a core infrastructure asset for the artificial intelligence era, is rising rapidly in South Korea. Telecom operators and system integration companies are racing to build large-scale clusters. The government has also pledged support, including electricity-related backing, fueling expectations that South Korea could emerge as a global AI hub.

SK Telecom Maps Out 15-Gigawatt Data Center Buildout

SK Telecom is making the biggest investment among the country’s telecom carriers. The company plans to build as much as 15 gigawatts of data center capacity in South Korea in phases. It aims to begin operations with 5 gigawatts in 2029, then expand into the Yeongnam and southwestern regions.

For now, SK Telecom is building a 100-megawatt data center in Ulsan with Amazon Web Services for about $5.1 billion. To reduce funding pressure and business risk, the company plans to roll out the 15-gigawatt AI data center project gradually through 2035, depending on demand and investment conditions.

LG Uplus is building a 200-megawatt hyperscale data center in Paju, Gyeonggi Province. The company says it will shorten construction by more than six months by adopting a prefabricated modular data center, or PMDC, model, under which key equipment is modularized and assembled on site. Paju is the only location in the Seoul metropolitan area able to supply 200 megawatts of power.

A key feature of the project is LG Group’s “One LG” strategy, which draws on affiliates including LG Electronics and LG Energy Solution to source cooling and battery technology in-house.

KT is also stepping up AI data center investment. The company plans to spend about $3.6 billion over the next five years to build 1 gigawatt of AI data center capacity. The facilities will be spread across about 25 sites where domestic companies operate.

At a July 6 news conference marking his first 100 days in office, KT Chief Executive Officer Park Yoon-young said physical AI will require ultra-low-latency AI data centers located close to customer companies. KT will use its branch office sites across the country as data center locations, he said.

Samsung SDS and LG CNS Expand Their Businesses

System integration companies are also expanding their data center operations. Samsung SDS plans to invest about $7.2 billion in AI infrastructure, data centers and mergers and acquisitions by 2031. Of that, about $3.6 billion is earmarked for AI infrastructure.

The company also plans to expand data centers previously used only for Samsung Group affiliates into delegated build-and-operate, or DBO, and colocation businesses. Samsung SDS Chief Executive Officer Lee Jun-hee said the company is piloting immersion cooling systems at its Dongtan data center to improve energy efficiency.

LG CNS is expanding its data center business overseas. The company is building an AI data center in Jakarta after winning a project valued at about $72 million, with completion targeted for the end of this year. The 11-story facility will be able to accommodate more than 100,000 servers. It will start with 30 megawatts of initial receiving capacity and later expand to as much as 220 megawatts.

The government on June 29 held a public briefing at the Blue House on what it called South Korea’s three mega-projects for a national leap forward. It designated AI data centers as one of the country’s three strategic industries, alongside semiconductors and physical AI.

In the first phase, the government plans to build 8.4 gigawatts of AI data center capacity in Ulsan, Donghae and Sejong, with construction beginning in 2028 and operations starting in phases from 2029. In the second phase, it aims to add another 10 gigawatts, taking total capacity to 18.4 gigawatts by 2035.

The government is also preparing follow-up measures including grid expansion, water supply and fast-tracked permits. Bae Kyung-hoon, deputy prime minister and science and ICT minister, described AI data centers as “the heart that makes AI run and a token factory that prints tokens.” The goal is to build a token economy in which tokens generated at AI data centers power physical AI and AI agents.

Ra Hyun-jin, Hankyung.com reporter raraland@hankyung.com