A new artificial intelligence (AI) dedicated data center will be constructed in Pohang, with a total project cost of 600 billion won (approximately $600 million). The government plans to streamline related procedures, including local financial investment reviews, to expedite the Pohang AI data center project, which has been selected as the ninth initiative under the local revitalization investment fund.
Deputy Prime Minister and Minister of Economy and Finance Lee Hyung-il and Deputy Prime Minister and Minister of Science and ICT Baek Kyung-hoon discussed these plans during a joint meeting of the Economic and Science and Technology Ministers at the Government Seoul Building on October 28.
The project involves the construction and operation of an AI-exclusive data center in the Gwangmyeong General Industrial Complex in Ocheon-eup, Nam-gu, Pohang. The data center will have a power capacity of 40 megawatts (MW) and an IT load capacity of 32 MW. It will lease space to AI companies and provide ancillary services such as power supply and climate control.
The initiative gained momentum after being selected for investment by Korea Growth Investment Corporation in July, followed by a project financing agreement in September. As of the end of September, the project was 7.66% complete, indicating that construction is progressing as planned.
The total project cost is 600 billion won, comprising 150 billion won in equity and 450 billion won in loans. Gyeongbuk Province is required to invest 4 billion won in the special purpose company (SPC) established for the project. The deadline for this investment is set for the end of March 2024, in accordance with the shareholder agreement, loan agreement, and fund investment guidelines.
The project aims for completion in November 2024, followed by a two-month trial operation, with full operations expected to commence in January 2028. The government emphasizes the need to secure the SPC investment budget from Gyeongbuk Province promptly to align with the operational timeline, thus expediting the local financial review process.
To facilitate this, the project will be subject to an exemption track. After approval from the Economic Ministers' meeting, the Ministry of the Interior and Safety will determine and notify whether to exempt the project from further review. This approach aims to reduce preliminary procedures required for local government investment, thereby accelerating project implementation.
The government anticipates that this project will generate a production inducement effect of 1.2 trillion won and create approximately 4,000 jobs, contributing to the revitalization of the local economy.
By leveraging the region's abundant power infrastructure, the plan is to develop the East Coast of Gyeongbuk into a hub for the AI industry and stimulate growth in related sectors. The timely establishment of essential AI infrastructure is expected to facilitate the AI transformation of local industries and attract advanced companies, while also alleviating the concentration of data centers in the metropolitan area.
The local revitalization investment fund was introduced in 2024 to attract private capital for regional projects. It operates by using a government-established master fund as a catalyst to draw in private investments, aiming to support large-scale regional development projects through project financing. To date, nine projects have been selected, with an estimated total project cost of approximately 3.6 trillion won.
* This article has been translated by AI.
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