That ambition extends far beyond semiconductors. Every AI factory — from chip fabrication plants and advanced packaging facilities to hyperscale data centers and AI inference clusters — runs on one indispensable input: electricity. As booming AI power demand collides with South Korea's renewable-heavy southwest, the country's rechargeable battery makers have unexpectedly found a new domestic growth engine after years of slowing electric-vehicle demand and brutal price competition from Chinese rivals.
On a stretch of reclaimed coastal land in South Korea's southwestern Jeolla region, ground was broken this month on the National AI Computing Center, the first physical step toward what the government calls the backbone of its "AI Expressway."
Not far from the ceremony, another race is unfolding.
What began as competition for utility-scale storage contracts has rapidly evolved into a strategic home-market battleground, one the three battery makers hope will cushion their businesses as global EV growth slows.
The attraction of South Jeolla is rooted as much in physics as policy.
The province hosts roughly one-fifth of South Korea's installed solar capacity, the highest concentration in the country. Solar generation floods the grid with electricity during the day, only to leave it short after sunset — creating an ideal market for batteries that store excess power and discharge it when demand peaks.
The government has increasingly embraced that logic.
About 93 percent of the roughly 1,128 megawatts awarded in the first two rounds of its long-duration ESS central contract market went to projects in South Jeolla, turning what began as a regional grid-balancing effort into one of the country's most important infrastructure investments. All three battery makers secured projects.
The rapid emergence of AI only strengthens the investment case.
According to the International Energy Agency, electricity consumption by data centers rose 17 percent in 2025, compared with just 3 percent growth in global electricity demand overall. As AI workloads create increasingly large and volatile swings in electricity use, the agency expects battery storage inside data centers worldwide to reach between 20 gigawatts and 25 gigawatts by 2030.
"Through the National AI Computing Center, the government and the private sector will work together to secure advanced GPUs and foster Korea's homegrown AI chip ecosystem," Deputy Prime Minister and Science Minister Bae Kyung-hoon said during the groundbreaking ceremony in Haenam, describing the project as the core hub of the country's AI strategy powered by abundant renewable energy.
Samsung SDI has emerged as the early domestic leader. The company secured about 56 percent of capacity awarded in the first two ESS auctions, benefiting from strong demand for its prismatic battery cells. In July's tender for AI-linked grid storage projects, operators using Samsung SDI cells accounted for roughly two-thirds of awarded capacity.
SK On captured about half of the 565-megawatt second auction, all allocated to South Jeolla projects, while repositioning ESS as a standalone business alongside electric-vehicle batteries.
LG Energy Solution secured roughly 19 percent of the combined auction volume and is expanding beyond batteries themselves. The company will operate a virtual power plant linking 140 megawatt-hours of storage across seven distribution lines in Jeolla, a system expected to absorb an additional 52.4 gigawatt-hours of renewable electricity annually over two decades beginning in 2027.
Government policy could provide another boost.
The finance ministry plans to introduce domestic-production tax credits beginning in 2027 for six strategic future industries, including secondary batteries. The specific products eligible for the incentives and the amount of each credit, however, will be determined later through a presidential decree.
"For the secondary-battery industry, the specific eligible products and tax-credit amounts still need to be defined before the impact on individual companies can be assessed," said Chang Jung-hoon, an analyst at Samsung Securities.
"For battery-cell makers, whose production is increasingly overseas, the direct benefit may be limited. But as domestic ESS auctions expand, companies with the largest local production capacity — particularly Samsung SDI and, to a lesser extent, LG Energy Solution — are likely to benefit the most."
The opportunity is unlikely to remain confined to the southwest.
The Korea Energy Economics Institute estimates that storing the country's projected annual renewable electricity surplus by 2038 will require batteries and pumped-storage facilities with a combined capacity of 119.4 gigawatt-hours.
The government is preparing a third central-market ESS auction, widely expected around September with a value of roughly 1 trillion won ($720 million).
For battery makers that have spent the past two years navigating the global EV slowdown, South Korea's AI push is creating an unexpected second act.
In the emerging AI economy, semiconductors may provide the computing power, but batteries are becoming equally essential infrastructure — storing the electricity that keeps AI factories running long after the sun goes down.
AJP Takeaway:
• What happened: South Korea's AI-industrial strategy is unexpectedly creating a new domestic growth engine for Samsung SDI, SK On and LG Energy Solution as energy-storage systems become essential infrastructure for AI data centers and renewable-powered grids.
• Why it matters: After two difficult years of slowing EV demand and aggressive Chinese competition, Korea's battery makers are finding a second growth market at home by supplying grid-scale storage rather than automobiles.
• By the numbers: About 93% of the first two government ESS auctions were awarded to projects in South Jeolla. Samsung SDI captured 56% of total awarded capacity, SK On secured roughly half of the second-round auction, while LG Energy Solution won about 19% overall.
• The bigger picture: The IEA expects battery storage inside data centers worldwide to reach 20–25 GW by 2030 as AI sharply increases electricity demand. South Korea is positioning its battery industry to benefit not only from EV electrification but also from the build-out of AI infrastructure, making ESS a potential second pillar of long-term growth.
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