Only 6% of the AI data center (AIDC) capacity announced by major South Korean companies has actually begun construction this year. While the U.S. is also experiencing delays in AIDC projects, South Korea's progress is significantly lower, compounded by the burden of securing hundreds of trillions of won in funding.
According to the IT industry on October 26, SK hynix, KT, Naver, LG Uplus, and Kakao have collectively set a target capacity of approximately 6.5GW. Of this, only 410MW has either begun construction or is operational, resulting in a construction rate of 6.3%. SK hynix, which accounts for 77% of the total target, aims to launch 5GW in the first phase by 2029, but only the Ulsan site, which began construction last August, contributes about 100MW (2%), dragging down the average. The other four companies have only commenced construction on 21% to 27% of their combined target of 1.48GW.
By company, KT plans to build 1GW by 2031, with 50MW in Ansan and 60MW in Gunsan (expandable to 300MW) already under construction, resulting in a construction rate of 11% to 15%. A 50MW project in Incheon Cheongna is scheduled to begin construction in the fourth quarter of this year. LG Uplus is constructing a 200MW facility in Paju, with the first building expected to be completed by June 2027, giving it the highest construction rate among the companies.
Naver plans to expand its Sejong site to 200MW, starting with an initial phase of 55MW by 2028, while Kakao's 80MW project in Namyangju is still in the planning stage.
In the U.S., where 58% of global AI infrastructure funding is concentrated, the construction rate is around 30%, which is still higher than South Korea's. According to EpochAI, OpenAI's 'Stargate' has initiated construction on 9.3GW out of approximately 9.6GW across seven sites in the U.S., with 0.3GW already operational. In Abilene, Texas, four out of eight buildings are operational, with completion targeted for the fourth quarter of this year, while other major sites aim for completion by the fourth quarter of 2028. The 410MW constructed by the five South Korean companies represents only 19% of the Stargate New Mexico site (2.2GW). Meta's Hyperion in Louisiana is under construction with a maximum capacity of 5GW, exceeding $50 billion in investment, with full completion expected around 2032. Amazon's Indiana site has about 1GW operational out of 2.2GW, and xAI's Colossus2 has approximately 0.95GW operational out of 2GW.
Market research firm Sigline Climate reports that of the 16GW of AIDC expected to be operational this year, 5GW (31%) is currently under construction, while 6.3GW (29%) of the 21.5GW expected next year is also under construction.
The slow pace of construction for domestic AIDCs is largely attributed to funding challenges. According to the IT industry, the cost to build 1GW is estimated at 80 trillion to 90 trillion won. To meet their targets, the five companies need to secure an additional 600 trillion won.
The first reason for the funding difficulties is that the equity capital available from project sponsors is significantly lower than the required amount. SK Telecom has committed to invest 750 billion won in SK hynix by 2030, which is less than 0.2% of the approximately 462 trillion won needed for the first phase of 5GW. The remainder must be sourced externally, but SK hynix aims to secure its first external funding by the end of this year or early next year.
The second reason involves the criteria set by lending institutions. According to legal analysis firm Cleary Securities Watch, lenders are focusing their funding on projects with creditworthy tenants and long-term lease agreements. For instance, SK Telecom's 100MW AIDC in Ulsan secured funding due to its contract with AWS, while other projects without confirmed clients are being deprioritized by investors, according to sources in the investment banking sector.
Power availability is also a variable. Cushman & Wakefield noted that access to electricity in South Korea is a constraint affecting data center development and asset value, highlighting serious limitations in the power grid in the metropolitan area.
Conversely, projects with secured lease agreements have attracted funding. LG Uplus's Paju site, which has the highest construction rate, reportedly completed contracts for one of its five buildings. The 40MW AIDC in Pohang, Gyeongbuk, secured 6 billion won in funding, including a 4.5 billion won bank loan, after NHN Cloud agreed to lease 16MW.
* This article has been translated by AI.
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