"AI Data Center Investment of 550 Trillion Won... Construction Order Cycle Incoming" [NC]

Government’s Three Major Mega Projects Underway
Rapid Growth in the Private Data Center Market
Focus on Real Estate and Infrastructure Assets

President Lee Jae-myung, Samsung Electronics Chairman Lee Jae-yong, and SK Group Chairman Chey Tae-won hold hands after announcing corporate investments at the three major mega projects national briefing held at the Blue House on the 29th of last month. Photo by Yonhap News

Investment plans for artificial intelligence (AI) data centers by the government and major corporations are expected to trigger a new supply cycle in the domestic construction industry. Analysts suggest that attention should be paid to large construction companies and related equipment suppliers with experience in building AI data centers.

On July 1, Samsung Securities predicted that the government's recently announced "3 Major Mega Projects" would benefit the construction sector. The government’s plan, centered around the establishment of the "Southwest Semiconductor Cluster," involves participation from groups such as SK Group, GS Group, and Naver. These companies plan to build AI data centers with a capacity of 8.4GW by 2029 and 18.4GW by 2035 in regional hubs such as Ulsan, Donghae, and Sejong. The total project cost of 550 trillion won includes development expenses, equipment, and investments in graphics processing units (GPUs).

Samsung Securities estimated that, assuming a project cost of 16 billion to 20 billion won per MW, the development cost alone—excluding GPUs—would reach between 134 trillion and 168 trillion won by 2029. The government plans to support the rapid supply of AI data centers by providing assistance with power, water, and permits. Already, with the passage of the Special Act on AI Data Centers last month,

Kyungja Lee, a researcher at Samsung Securities, stated, "With the passage of the Special Act on AI Data Centers in June last month, development momentum is expected to increase," and analyzed, "In the long term, a large-scale construction and equipment investment cycle driven by AI data centers will emerge."

In particular, the size of the domestic private data center market is expected to far exceed previous forecasts as a result of this mega project. Previously, the capacity of domestic private data centers was projected to grow from 1.9GW in 2025 to 6.3GW by 2030, but if the newly announced plans lead to actual investment, capacity could expand to around 15GW by 2029—more than ten times the current level.

Unlike traditional data centers, AI data centers require large-scale power infrastructure. AI clusters for training and fine-tuning require not only land and buildings, but also substantial power supply, water, and cooling facilities. Samsung Securities noted that such regional AI data centers should be considered infrastructure assets rather than real estate assets.

By contrast, data centers in the Seoul metropolitan area are likely to grow mainly to meet the demand for inference-based AI. Since inference data centers need to be close to end-users and it has become more difficult to obtain permits following the 2024 Power System Impact Assessment, the value of land as a real estate asset is considered especially important.

Researcher Lee explained, "Construction companies are expected to see an increase in orders as data center investment expands," and added, "Attention should be paid to Hyundai Engineering & Construction, GS Engineering & Construction, and DL E&C, all of which have experience in completing and winning contracts for about 10 hyperscale data centers, as well as GNC Energy, the top domestic supplier of emergency generators for data centers."

This content was produced with the assistance of AI translation services.