Why SK Group Chose Ulsan for Korea’s Largest AI Data Center

SK AI Data Center Ulsan: A Strategic Choice by SK Group

SK Group’s decision to invest over 7 trillion won in building a massive AI data center in Ulsan raised eyebrows in the IT and construction sectors. The metropolitan area traditionally offers better infrastructure and proximity to clients, making it a more obvious choice. Yet, SK Group selected Ulsan, citing unique advantages that align with their operational needs.

Why Ulsan?

Choi Chang-won, chairman of the SK SUPEX Council, revealed that while the initial suggestion was to build in the metropolitan region, he advocated for Ulsan based on its superior support ecosystem. This ecosystem includes essential infrastructure and resources that are crucial for operating a large-scale AI data center efficiently.

SK Telecom’s president, Ryu Young-sang, initially favored the metropolitan area but ultimately agreed after discussions with Chairman Choi and Ulsan’s mayor, Kim Doo-gyeom. The mayor’s promise of full administrative support also played a key role in the final decision.

Optimal Energy and Network Infrastructure

The AI data center is being built within Ulsan’s national industrial complex, on a site acquired from SK Chemicals. This location offers room for future expansion, which is critical for a project of this scale.

SK Group benefits from existing energy infrastructure in Ulsan. SK Gas operates LNG terminals and LPG storage at Bukshin Port, while SK Multi-Utility runs a 300 MW combined heat and power plant adjacent to the data center site. This proximity minimizes power loss and reduces electricity costs compared to relying on Korea Electric Power Corporation.

From a network perspective, SK Telecom and SK Broadband provide a solid foundation. The plan includes multiple high-speed dedicated lines (DCI) connecting the new data center with the metropolitan area, ensuring fast and reliable data transmission.

Strong Administrative Support from Ulsan City

Mayor Kim Doo-gyeom’s commitment to support the project expedited the permitting process, allowing the groundbreaking ceremony to take place just two and a half years after initial discussions. This level of cooperation is rare and beneficial for large-scale construction projects.

The AI data center is expected to reach about 103 MW capacity by February 2029. Ulsan city and SK Telecom have signed an MOU to expand the facility into a gigawatt-level AI data center cluster. This expansion includes support for SK Group and AWS in securing additional land and permits.

The project is anticipated to generate more than 78,000 jobs and contribute approximately 25 trillion won to the local economy over 30 years, including roles in R&D, construction, and AI-related industries.

Ulsan: The Hometown of SK Group

SK Group’s connection to Ulsan runs deep. The group’s roots trace back to Ulsan Textile in 1968, and the energy sector’s beginnings with Korea Oil Corporation in 1962. Ulsan remains a core production base for SK Innovation, underlining the city’s strategic value.

Chairman Chey Tae-won of SK Group has personally led efforts to establish the AI data center, including multiple meetings with Amazon’s CEO Andy Jassy. He views this project as a significant step following SK’s advancements in energy, information communication, and semiconductors.

Chairman Choi highlighted that building the AI data center in Ulsan is more than erecting a facility; it represents a foundation for Korea’s digital economy and future growth.

Key Takeaways for Real Estate and Construction Professionals

• Site Selection: Ulsan’s industrial complex offers ample space and existing infrastructure, making it ideal for large-scale, power-intensive construction projects.
• Energy Efficiency: Proximity to energy generation facilities minimizes power loss and cuts operational costs—an important factor when planning data centers or industrial developments.
• Administrative Cooperation: Strong local government support can significantly shorten permitting and construction timelines, reducing project risk.
• Long-Term Expansion: Choosing locations with room for future growth ensures projects can scale without relocation, preserving investment value.

For those involved in construction and real estate, the SK AI Data Center Ulsan project demonstrates how strategic infrastructure and local partnerships can create competitive advantages in large-scale developments.