South Korea builds out $19.9M micro data centers for domestic AI chips

South Korea‘s government is launching a KRW27.3 billion ($19.9 million) initiative to build micro data centers powered by domestically manufactured AI chips, targeting small and medium-sized enterprises, hospitals, and public institutions across non-metropolitan regions. The project aims to reduce dependence on US firms like Nvidia while providing local AI chipmakers such as Furiosa AI and Rebellions with real-world deployment opportunities to prove their technology in commercial settings.

What you should know: The Ministry of Science and ICT will lead the construction of container-based data centers in regional areas from 2025 through 2029.

• These modular micro data centers integrate compute, storage, power, cooling, and security into units deployed close to edge locations like factories and clinics.
• Participating companies must create scalable, cloud-like architecture linking multiple facilities across the country.
• Regions such as Daegu and Gwangju are under consideration for initial deployments.

Why this matters: Over 90% of commercial data centers in Korea are concentrated in the Seoul metro area and controlled by global cloud providers like AWS and Microsoft Azure, leaving little room for local infrastructure experimentation.

• Global cloud service providers set strict hardware and operational requirements that have created barriers for domestic AI chipmakers trying to commercialize their solutions.
• A ministry official said the project’s goal is to establish a proof-of-concept environment where domestic AI chips can be tested and applied in real data center settings—an area currently dominated by Nvidia.

The competitive landscape: South Korea’s data center market is experiencing significant expansion with major international and domestic investments.

• SK Group, a major Korean conglomerate, recently confirmed a partnership with AWS to build what would be the largest AI data center in the Asian nation, featuring 60,000 GPUs in a 103-megawatt facility in Ulsan’s Mipo National Industrial Complex.
• The phased rollout will see 41 MW of capacity come online by November 2027, expanding to the full 103 MW by February 2029, with plans to eventually scale to a gigawatt-class facility.
• Chinese company Alibaba Cloud recently opened a second data center in South Korea, expanding its regional footprint to meet rising demand for cloud computing and AI services.

Important stats: The SK Group-AWS partnership represents substantial financial commitments from multiple stakeholders.

• AWS will invest $4 billion, while SK’s key subsidiaries—SK Telecom, SK Broadband, SK Gas, and SK Hynix—will contribute substantial resources to the initiative.
• SK Telecom and SK Broadband plan to invest 3.4 trillion won ($2.5 billion) in AI-related initiatives by 2028.
• The data center’s proximity to SK Gas’s LNG combined-cycle power plant ensures stable power delivery, critical for AI infrastructure.