"Why Ulsan?"
When SK Group announced it would invest over 7 trillion won to build a super-large artificial intelligence (AI) data center in Ulsan, questions arose in the IT industry. The metropolitan area has many clients and is well-equipped with infrastructure such as networks, power, and personnel, making it an ideal location for data center operations. However, SK Group has chosen Ulsan as the site for the largest domestic AI data center.
Choi Chang-won, chairman of the SK SUPEX Council, provided background on the decision to start this project in Ulsan during the groundbreaking ceremony for the 'SK AI Data Center Ulsan' held on the 28th. Choi noted, "Ryu Young-sang, the president of SK Telecom, said that the AI data center should be built in the metropolitan area, but I urged him to trust me and go to Ulsan, knowing that the ecosystem necessary for establishing the AI data center would be better there than anywhere else." He explained that he personally persuaded Ryu, saying, "You won't regret going to Ulsan."
Ryu also stated that he had initially advocated for establishing the center in Seoul but decided to build the 'SK AI Data Center Ulsan' after being persuaded by Choi and Kim Doo-gyeom, the mayor of Ulsan. He humorously remarked, "I am a traitor for advocating to build the data center in Seoul." He added, "I am glad to be here at the groundbreaking ceremony after working harder than anyone to realize the establishment in Ulsan."
As Choi explained, the energy-based infrastructure that SK Group has built in Ulsan is a 'necessary condition' for operating an AI data center that requires a lot of electricity. It might be that other large corporations would find the metropolitan area more suitable for establishing and operating super-large AI data centers, but from SK Group's perspective, it is indeed calculable that Ulsan is 'more advantageous'.
◇ Energy and network infrastructure are both 'optimal'
The 'SK AI Data Center' was launched when SK Broadband acquired the site of SK Chemicals within the Ulsan National Industrial Complex. There are numerous energy and chemical facilities of SK Group located in Ulsan, which favors securing new land for upcoming expansions of data centers.
An advantage is that SK Group can secure the power needed to operate the AI data center from the energy infrastructure it possesses in Ulsan. SK Gas has an LNG terminal and LPG storage facility in the northern Ulsan port. SK Multi-Utility (SKMU) operates a 300-megawatt (MW) LNG combined heat and power plant based on this infrastructure.
This power plant is located right next to the 41 MW facility that will be the first to start operations (targeting November 2027) among the multiple buildings of the 'SK AI Data Center Ulsan'. The level of power loss due to distance is negligible, making it efficient. Since the electricity produced here will be supplied directly, the electricity cost is cheaper than that of the Korea Electric Power Corporation.
The 'network infrastructure', which is as crucial as power for a data center, is also not a problem from SK Group's standpoint. This is due to SK Telecom, Korea's top mobile telecommunications company, and SK Broadband, which launched the world's first asymmetric digital subscriber line (ADSL) high-speed internet service in 1999. The two companies plan to establish a multi-route high-speed dedicated line (DCI) connecting the SK AI Data Center Ulsan and the metropolitan area using their nationwide network.
◇ Ulsan city offers proactive 'administrative support'
Ulsan city's proactive administrative support is also cited as a background for the establishment of this AI data center. Choi stated, "When I first discussed the 'establishment of the AI data center' with Kim Doo-gyeom, the mayor of Ulsan, he responded, 'Do it to your heart's content; we will support everything you need,'" adding, "After such discussions, we have reached this groundbreaking ceremony after two and a half years. It's a victory of administrative power."
Ulsan city and the Korea Industrial Complex Corporation (KICOX) processed the necessary permits for the construction of the 'SK AI Data Center Ulsan' on a fast track. An SK Telecom official remarked, "As we enter the AI era, data is skyrocketing. Timely responses in the data center business are crucial."
Ulsan city's support will continue even after the start of construction. The AI data center currently confirmed for establishment in Ulsan is about 103 MW (targeting February 2029). At this groundbreaking ceremony, Ulsan city and SK Telecom signed a memorandum of understanding (MOU) indicating plans to expand it into a 'GW-class' AI data center cluster. The city aims to support the administrative procedures needed to secure additional facilities near the Ulsan National Industrial Complex based on business judgments from SK Group and AWS.
Through this investment from AWS, SK Group expects to create over 78,000 jobs and generate an economic impact of 25 trillion won over the next 30 years. Ryu noted, "We anticipate not only direct job creation in the Ulsan area but also the influx of various personnel, including research and development (R&D) and construction workers, as well as attracting AI corporations."
◇ "Ulsan is SK's hometown"
The establishment of the largest AI-only data center outside the metropolitan area is seen as a reflection of the will of Chey Tae-won, chairman of SK Group. Last June, Chey first met with Andy Jassy, CEO of Amazon, and introduced the capabilities that SK Group possesses, thereby paving the way for this project. During that time, Chey explained, "SK is a rare company in the world that can not only deal with semiconductors and energy but also establish, operate, and develop services for data centers."
Afterward, Chey met with CEO Jassy two more times to discuss collaboration strategies, and SK's practical team detailed the project through around 30 meetings, both in person and via video calls, until May of this year.
Chey believes that the establishment of this AI data center can serve as the group's fourth quantum leap following energy, telecommunications, and semiconductors. This is the reason he has taken the lead on this project. Chey personally signed the 'SK-AWS Ulsan AI Data Center construction contract' last June.
Chey is said to have a special affection for Ulsan. This is because Ulsan has continued a close relationship with SK Group for about 60 years since the establishment of Ulsan Textile in 1968. SK Group (then Sunkyong Group) built a large textile factory in Ulsan, creating a solid production base for the textile industry and becoming an important part of the group's vertical integration strategy.
Energy, which is a major growth driver for SK Group, originated in Ulsan in 1962. The Korea National Oil Corporation, the predecessor of SK Innovation, began operations in the Ulsan Industrial Complex (now Ulsan Mipo National Industrial Complex) and was acquired by Sunkyong (now SK Group) in 1980. Ulsan remains a core production base for SK Innovation. Based on its long relationship with Ulsan, SK has been holding the 'Ulsan Forum' annually since 2022.
Choi stated, "While the Choi family's hometown is Suwon, SK's hometown is Ulsan," adding, "Deciding to build the AI data center in Ulsan, which has a deep understanding of industry as well as the passion and administrative capacity to nurture it, was a wise decision." He further stated, "'SK AI Data Center Ulsan' is not just about constructing a building; it is an important infrastructure for establishing the foundation of Korea's digital economy and building the future."