TLDR:
- SK Group and Amazon Web Services to co-invest over $5 billion in South Korea’s largest AI data center.
- AI-related stocks including SK Hynix and Kakao rally following the announcement.
- Ulsan chosen for strategic decentralization away from Seoul’s crowded tech infrastructure.
- South Korea positions itself against regional competition in the rapidly expanding Indo-Pacific data center market.
On June 20, a significant leap forward for South Korea’s artificial intelligence ambitions was unveiled as SK Group and Amazon Web Services announced a collaboration to invest $5.1 billion in the country’s largest AI-focused data center, set to rise in the southeastern city of Ulsan.
$5 Billion Vision for AI in Ulsan
The announcement, made publicly by the Ministry of Science and ICT, sent ripples through financial markets, immediately lifting AI-related stocks and pushing the benchmark KOSPI index above the 3,000 mark for the first time in over three years. This reflects not just a moment of excitement, but a serious commitment to advancing South Korea’s tech infrastructure.
Central to this ambitious plan is a sprawling AI complex, with construction set to commence in September. Initially, the facility will operate at a capacity of 100 megawatts, projected to be fully operational by 2029. SK Group’s Chairman Chey Tae-won has also shared a bold vision to expand this hub to a capacity of one gigawatt—transforming Ulsan from its industrial roots into a profound center for digital innovation.
Stock Market Reacts as AI Momentum Builds
The financial community quickly registered their optimism following the announcement. Notably, shares of SK Hynix, a leader in AI memory chip production, saw a rise of over 3%, while tech platform Kakao surged by 11%. LG CNS also enjoyed a solid 9% increase in its stock price. This enthusiasm transcended individual companies, reflecting a collective investor expectation that South Korea is gearing up to take a substantial role in the fundamental structure of AI-related technologies.
This lively market reaction isn’t just about short-term gains; it echoes a deeper validation of SK Group’s integrated strategy—merging AI capabilities with semiconductor innovation and infrastructure development, which analysts believe will reshape the tech landscape and drive growth across various sectors in the long run.
Ulsan Emerges as Strategic Tech Hub Beyond Seoul
The decision to place this massive investment in Ulsan rather than in Seoul aligns well with South Korea’s overarching strategy to decentralize its tech presence. By moving the AI center to Ulsan, the aim is to alleviate the strain on Seoul’s aging power and data infrastructure. Traditionally seen as a hub of heavy industry, Ulsan is on the verge of a major shift—transforming into a vibrant tech ecosystem that will attract talent, resources, and innovative minds from across the nation.
This choice of location mirrors South Korea’s aspirations to establish “Data Valleys” in regions that have been less prioritized. With energy limitations and space constraints becoming increasingly prominent in major urban centers, initiatives like this spotlight a more sustainable framework for ongoing tech advancements and development.
Global AI and Chip Race Intensifies in the Indo-Pacific
Beyond enhancing domestic capabilities, the partnership between SK Group and Amazon Web Services positions South Korea more competitively within the intense Indo-Pacific race for data center supremacy. While the country boasts an impressive internet penetration rate exceeding 97%, it has lagged behind regional heavyweights like China concerning raw data center capacity.
The project, with its potential to expand to an operational capacity of one gigawatt, aims to firmly place South Korea on par with top-tier hyperscale operators in the global arena.
Moreover, the announcement highlights the growing synergy between AI infrastructure and the ever-evolving semiconductor sector. Earlier this year, interactions between SK Group’s chairman and TSMC’s CEO pointed toward reinforcing cooperations on advanced semiconductor technologies, particularly in high-bandwidth memory (HBM). Given that SK Hynix holds a significant share of the global HBM market and counts industry giants like NVIDIA among its clientele, the integration of AI capabilities with robust semiconductor production emerges as a pivotal element of SK Group’s broader technological roadmap.