South Korea's AI Data Center Boom: Strategic Entry Points for Global Investors

South Korea's AI data center market is undergoing a transformative surge, driven by aggressive government policies, surging demand for hyperscale infrastructure, and a strategic shift toward regional development. At the heart of this evolution is a landmark Memorandum of Understanding (MOU) between DigitalBridge, a global digital infrastructure investor, and KT Corporation, South Korea's leading telecommunications provider. This partnership, announced in late 2025, represents a pivotal catalyst for AI infrastructure growth in Asia, offering global investors a blueprint for navigating the complexities of this high-potential market.

A Market on the Cusp of Hypergrowth

According to a report by Mordor Intelligence, the South Korean data center market was valued at USD 1.65 billion in 2025 and is projected to reach USD 4.27 billion by 2030, with a compound annual growth rate (CAGR) of 20.95%. This expansion is fueled by the government's strategic focus on AI as a national infrastructure priority, including a USD 35 billion investment to deliver 3 gigawatts of AI-ready capacity. The Ministry of Science and ICT has also introduced incentives such as 75% cash grants and seven-year tax holidays for projects in designated zones, creating a fertile ground for both domestic and foreign capital.

However, the market's trajectory is not without challenges. High electricity tariffs and grid constraints in Seoul have pushed developers toward decentralization, with Busan and Gumi emerging as key hubs. This shift aligns with the government's 2030 renewable energy target of 20%, which is expected to drive demand for energy-efficient infrastructure.

The DigitalBridge-KT Partnership: A Strategic Alignment

DigitalBridge's collaboration with KT Corporation exemplifies how global investors are leveraging local expertise to navigate these dynamics. The MOU, announced in November 2025, focuses on co-developing "AI factory-type" data centers capable of scaling to gigawatt capacities. KT's nationwide high-speed network and DigitalBridge's $11.7 billion DigitalBridge Partners III fund provide a complementary foundation for large-scale, multi-billion-dollar projects.

This partnership is particularly significant given KT's role in South Korea's AI ecosystem. The company is already expanding its GPU cluster capabilities and exploring tailored AI solutions for global clients. By integrating DigitalBridge's capital with KT's technical expertise, the collaboration addresses a critical gap: the need for resilient, high-performance infrastructure to support AI workloads. As noted in a BusinessWire report, the partnership also includes market research initiatives to identify new opportunities across the Asia-Pacific region, further amplifying its strategic reach.

Strategic Entry Points for Global Investors

For investors seeking to capitalize on South Korea's AI data center boom, the DigitalBridge-KT model highlights three key entry points:

1. Regional Decentralization: With Seoul's grid limitations, investors should prioritize projects in Busan, Gumi, or Incheon, where land and power availability are more favorable. Princeton Digital Group's (PDG) $700 million investment in a 48MW AI-ready campus in Incheon underscores this trend.

2. Energy-Efficient Infrastructure: The government's push for renewable energy integration means projects with advanced cooling systems and net-zero goals (like PDG's Net Zero by 2030 initiative) will attract regulatory and financial support.

3. Local-Global Partnerships: Collaborations between international investors and domestic telecom providers, as seen with DigitalBridge and KT, mitigate regulatory risks while leveraging local market knowledge. This model is critical in a market where grid management and power allocation are tightly controlled by KEPCO.

Competitive Landscape and Emerging Opportunities

While DigitalBridge and KT dominate headlines, the market is also seeing aggressive moves from other players. SK Hynix and Samsung Electronics are scaling production of High-Bandwidth Memory (HBM) to meet AI hardware demand, while KT Cloud plans an AI Data Center Demonstration Center in Seoul to showcase automation and energy efficiency technologies. These developments signal a maturing ecosystem where infrastructure, hardware, and software innovations are converging.

However, the market's complexity-marked by medium-level concentration and evolving regulations-requires investors to adopt a long-term, adaptive strategy. As highlighted in a Korea Times analysis, the government's 2024 legislation on disaster recovery and grid stability has created a more predictable environment, but investors must remain agile in response to power and land constraints.

Conclusion

South Korea's AI data center market is a linchpin in Asia's digital transformation, and the DigitalBridge-KT MOU is a testament to the strategic value of cross-border collaboration. For global investors, the key lies in aligning with partners who can navigate regulatory, technical, and energy challenges while capitalizing on government incentives. As the market's CAGR accelerates and regional hubs emerge, early movers with a focus on energy efficiency and local partnerships will be best positioned to reap the rewards of this AI-driven boom.