South Korea's AI Infrastructure Boom: SK Group's Ulsan Project as a Multi-Year Growth Catalyst

The SK Group-AWS partnership's $5.1 billion Ulsan AI data center project is more than an infrastructure milestone—it's a strategic linchpin for South Korea's economic sovereignty and tech dominance. Set to begin construction in August 2025 and reach full capacity by 2029, the 103 MW facility (expandable to 1 GW) will host 60,000 GPUs, eclipsing even the government's National AI Computing Center. This initiative positions South Korea as a global leader in AI infrastructure, with ripple effects across its tech ecosystem, geopolitics, and the broader economy. For investors, the project's cost efficiency, ecosystem synergies, and timeline offer a compelling case for long-term exposure to SK Group subsidiaries and AI/cloud enablers like SK Hynix, SK Telecom, Kakao, and LG CNS.

The Economic Multiplier Effect: A $18.3 Billion Catalyst

The Ulsan project is designed to drive economic transformation, not just tech infrastructure. By 2029, it's projected to generate $18.3 billion in economic activity and create 78,000 jobs across IT, energy, logistics, and semiconductor sectors. This aligns with South Korea's “AI Highway” initiative, a government-backed plan to build a national AI compute backbone. The data center's phased rollout—41 MW by 2027, 103 MW by 2029—ensures scalability while mitigating overcapacity risks.

The KOSPI's surge to a 3-year high of 2,946.66 in June _2025 underscores investor confidence in tech-driven growth. The index's 1.8% monthly gain was fueled by IT and defense sectors, with SK Group stocks leading the charge.

Strategic Investment Plays: Ecosystem Winners

The Ulsan project's success hinges on a vertical integration of SK Group assets and third-party enablers:

1. Core SK Group Plays

• SK Telecom (SKT): As the project's lead manager, SKT is central to SK Group's “AI Infrastructure Superhighway” strategy. Its GPU-as-a-Service (GPUaaS) and 5G-driven edge computing solutions will monetize the data center's capacity. A $2.5 billion AI infrastructure commitment by 2028 positions it to capture recurring cloud revenue.
• SK Hynix (000660.KS): The semiconductor giant supplies AI-optimized chips for the data center's GPUs, creating a self-reinforcing loop: higher compute demand → increased chip sales. Its advanced memory and storage tech are critical for AI workloads.

2. AI/Cloud Enablers

• Kakao (KCIC): Its consumer AI agents (e.g., A. and Aster) benefit from the Ulsan facility's cost-efficient compute power, enabling faster iteration and broader adoption. Kakao's enterprise AI services (AIX) also gain scale through SK's ecosystem.
• LG CNS (071040.KS): A key provider of enterprise AI solutions, LG CNS will leverage the data center's infrastructure to serve manufacturing and logistics clients, aligning with South Korea's goal of 2,000 AI-driven factories by 2030.

Risks and Mitigation: Overcapacity and Geopolitical Crosscurrents

The project's risks are manageable but material:
- Overcapacity: Phased expansion reduces upfront risk, while global AI adoption (projected to grow at a 28.2% CAGR in marketing alone) ensures demand.
- Geopolitical Tensions: U.S.-China tech rivalry and regional energy instability (e.g., Middle East conflicts) could disrupt supply chains or raise energy costs. However, the Ulsan facility's cold energy innovation—using LNG byproducts for cooling—cuts operational costs by 30%, shielding it from energy volatility.

The SK Group-AWS partnership also mitigates geopolitical risks by diversifying tech supply chains. SK Hynix's chip manufacturing and AWS's global cloud footprint reduce reliance on U.S. or Chinese monopolies, enhancing South Korea's data sovereignty.

Investment Thesis: A Multi-Year Growth Runway

The Ulsan project's 2029 completion timeline offers a clear catalyst for sustained growth. Key inflection points include:
- 2025–2027: Early-stage construction and Phase 1 (41 MW) completion boost SK Telecom and SK Hynix valuations.
- 2028–2029: Full 103 MW capacity drives enterprise adoption and AI-as-a-Service revenue, benefiting enablers like Kakao and LG CNS.

Investors should prioritize SK Telecom for its project leadership and recurring revenue streams, paired with SK Hynix for its chip demand leverage. Enablers like LG CNS offer sector diversification, while Kakao benefits from consumer AI adoption.

Conclusion: South Korea's Tech Sovereignty Play

The Ulsan data center is more than a data center—it's a strategic bet on South Korea's tech sovereignty. By combining SK Group's industrial might with AWS's cloud expertise, the project addresses geopolitical, economic, and environmental priorities: reducing U.S.-China tech dependency, fueling job creation, and pioneering sustainable energy models. For investors, this ecosystem offers a rare blend of multi-year growth, defensive cost efficiency, and geopolitical tailwinds. The KOSPI's tech-driven momentum in 2025 is just the beginning.

Actionable Advice:
- Buy SK Telecom (SKT) on dips below $2.00 (June 2025 valuation).
- Add SK Hynix (000660.KS) for semiconductor-driven AI demand.
- Hold stakes in enablers (Kakao, LG CNS) as enterprise adoption accelerates.

The AI infrastructure boom isn't just a South Korean story—it's a global template for tech resilience in an era of fragmentation.