Data Center Market Insights: South Korea

Data Center Market Insights South Korea: How to succeed in this unique market

With a population of close to 52 million people, an internet penetration rate of over 97%, and a mobile internet penetration of 93.6%, South Korea is one of the best-connected countries in the world. Combine this with an innovative, tech-savvy economy and the highest social media user penetration in Asia Pacific, and it’s easy to see the country’s draw, and its great potential for digital business growth.

Navigating the South Korean Market

The data center market in South Korea is dynamic with a diverse customer base, ranging from global hyperscalers and cloud providers such as AWS and Microsoft, to local digital players such as Kakao and Naver, the large Korean conglomerates such as Samsung, LG and SK, as well as major Chinese players. Many of these companies are expanding their digital presence while actively working to integrate AI solutions into their business operations, further fueling the demand potential of this exciting market for data centers.

At the same time, South Korea’s digital ecosystem is, as with many countries in the APAC region, unique. For example, home-grown platforms play a big role in the domestic social media scene alongside more global names such as Instagram and Youtube. Meanwhile the regulatory and governance landscape is highly sophisticated, combined with the complexities of Korean business culture. In short, for the world’s tech giants and other hyperscaler customers to achieve success in South Korea, they need to have a solid understanding of the local market and partner with experts on the ground.

Securing Data Center Power

Another important market factor to take into consideration, especially when it comes to data centers, is the issue of electricity supply in South Korea. While this has been a hot topic worldwide in recent years, some special circumstances in South Korea are having a unique impact. Due to limited transmission capacity into Seoul Metropolitan Area, there are regulatory pressure and difficulties in securing power consumption approvals for new industrial facilities, including data centers. This in turn has led to South Korea currently being one of the toughest jurisdictions in the world to secure data center capacity, with new regulations mandating tough power grid impact assessments for new projects.

Digital Edge’s Position in the South Korean Market

So, how is Digital Edge positioned to navigate these unique challenges in the South Korean data center market to the benefit of our customers? Thanks to a strong local presence and our highly professional staff with deep knowledge of the market, we now have three operational data centers in the market, with plans to continue to grow our presence in the near future.

Crucially we have a large plot of land in the Seoul metro which has been granted 180MW of utility power, enabling us to develop a large campus to meet the needs of high power density hyperscale and AI customers. We also have key partnerships with leading local players such as SK Ecoplant, a major developer, providing us with on the ground expertise to better navigate this unique market.

Digital Edge Data Centers in South Korea

Our first connectivity focused data center in South Korea which we acquired from Sejong Telcom, known as SEL1, is a 2MW carrier neutral colocation data center strategically located in Seoul’s Gangnam district.

Our PUS1 facility located in Centum City, Busan is integrated with a Cable Landing Station. This enables us to provide direct interconnection services to major international and domestic network capacity. Busan also provides geographical redundancy to Seoul for those customers who are looking to build high-availability architecture in South Korea.

100MW AI Ready Campus

With South Korea’s AI market predicted to grow at a CAGR of 27.5% over the next decade (2022 – 2032), rising to more than USD 20bn, we know that building ‘bigger is better’ when it comes to data centers for these power hungry applications. In fact, this was the tag line we used when we launched our newest facility, SEL2, just last month.

SEL2 provides a major expansion of our capacity in South Korea. This 36MW facility, developed in partnership with SK Ecoplant, is located in Bupyeong-gu, Incheon, in Seoul’s metropolitan area. To complement our other two more connectivity focused facilities, SEL2 is designed to cater to high power density applications such as cloud and AI.

The data center can cater to a cabinet density of up to 130kW when a liquid cooling solution is used, aligning with the cabinet density of the latest GPU servers. It also leverages a highly efficient engineering design to achieve an annualized design PUE (Power Usage Effectiveness) of 1.25, helping us to better manage our carbon footprint when serving these high power draw applications.

Most significantly, SEL2 offers scalability to our customers by being the first phase of our plans to build a 100+MW campus which, once completed, will be one of the largest commercial data centers in South Korea. Our second facility will be even larger than SEL2 in terms of IT load and we plan to commence construction of this new data center in 2025.

We know our customers, from the international hyperscalers to local IT and enterprise clients and Chinese players, are now looking to secure data center capacity which provides not only high performance but also the ability to scale as new AI applications come online and demand grows. Our new campus in Incheon makes us well placed to capture this demand by providing highly sought after data center capacity in the Seoul metropolitan area, and also furthers our company mission to bring world class digital infrastructure to Asia Pacific.

If you would like to know more about the data center market in South Korea and how we can help you reach your business goals here, do not hesitate to reach out to our team at sales.kr@digitaledgedc.com.