South Korea has long prided itself on being one of the few nations capable of fully leveraging the potential of artificial intelligence innovation. This national confidence is rooted in the country’s remarkable transformation from economic crisis to technological leadership ― a journey that began in earnest during the aftermath of the Asian financial crisis in the late 1990s.

That legacy, however, now faces a new test. Recent independent studies have raised alarms that South Korea may be slipping behind in the global race to lead the AI revolution. One such report, published by the Australia-based technology firm Cloudscene, placed South Korea at 30th worldwide in terms of the number of AI-usable data centers. Shockingly, this ranking puts the country behind many others that it had once viewed as trailing in the domain of technological innovation.

This surprising placement has prompted concern among policymakers and industry experts alike. Many attribute South Korea’s lagging performance to policy missteps under the previous Yoon Suk Yeol administration, combined with a persistent failure to overhaul outdated administrative regulations. While the previous government emphasized more efficient use of research funds, it overlooked the importance of improving the business environment for tech infrastructure ― particularly the construction and operation of data centers by both domestic and international firms.

As recently as early 2024, skepticism remained widespread ― even within government ranks ― about the notion that the global competition to develop stronger foundational AI models would continue to escalate. Many also questioned whether it was truly necessary for South Korea to dramatically scale up its computing power by securing more high-performance graphics processing units, especially given the massive costs involved.

These doubts were swiftly proven wrong. As AI development intensified globally, the price of GPUs surged amid fierce competition among the world’s tech giants. Companies like OpenAI, Google, Microsoft, Meta, Anthropic and Alibaba began pouring unprecedented investments into expanding their data center capacity and equipping them with the most advanced chips on the market.

Despite this global momentum, debate persisted in South Korea.

Some policymakers argued that the country could not feasibly compete with the world's largest tech conglomerates in developing foundational AI models. Instead, they suggested focusing on building secondary applications ― tools and services that piggyback on the capabilities of existing models ― once the foundational development race had settled.

While this pragmatic approach had its merits, it overlooked a critical opportunity. Even if South Korea did not lead in model development, it could still serve as a vital AI hub by attracting global firms to build their data centers within its borders.

The reality, however, is stark.

Cloudscene’s report found that Indonesia and Malaysia had 84 and 62 AI-ready data centers, respectively, compared to South Korea’s 43. This disparity is especially troubling given South Korea’s stronger standing in broader indices of technological and economic development.

President Lee’s ambitious AI policy

Fortunately, a new sense of urgency has emerged under the leadership of President Lee Jae Myung. Unlike his predecessor, Lee has recognized the transformative power of AI and the importance of establishing a robust infrastructure to support it.

At a groundbreaking ceremony for a new data center in Ulsan ― a joint venture between SK Group and Amazon Web Services ― Lee drew an evocative parallel between the digital infrastructure of the future and the Gyeongbu Expressway of the past. That expressway, constructed in the 1960s against widespread skepticism, played a critical role in catalyzing South Korea’s industrial rise.

Although he has not announced a specific target for the number of data centers to be built during his five-year term, Lee did pledge during his election campaign to procure 50,000 high-end GPUs. This would represent a massive leap forward, especially considering that only several thousand GPUs are believed to be currently in operation across the country.

Equally significant is Lee’s vision to decentralize this new digital infrastructure.

Rather than concentrating all development in the capital region, his administration is seeking to distribute data centers across a wide range of provinces. This strategy not only addresses the current shortfall in AI computing capacity, but also tackles one of South Korea’s most persistent social challenges: The overconcentration of population and economic activity in the Seoul metropolitan area. As of 2024, over 51 percent of the population lived in Seoul, Incheon and Gyeonggi Province ― an area that comprises just 12 percent of the nation’s landmass.

Modern data centers have evolved far beyond their original function as basic storage facilities. Today, they serve as industrial-scale computational hubs essential for training, fine-tuning, and deploying advanced AI models. Establishing such facilities outside the capital region could help balance national development by generating jobs both directly and indirectly related to the AI industry.

According to the Korea Data Center Council, private-sector revenue from data centers is projected to grow by an average of 13 percent annually over the next four years ― even before accounting for the anticipated expansion under Lee’s administration.

However, these gains will only materialize if structural challenges are addressed. Chief among them is the country’s aging and inefficient power grid system, which remains a bottleneck for large-scale AI infrastructure projects. In response, Lee has pledged to implement regulatory reforms and offer incentives to companies that locate new data centers near renewable energy sources in the provinces.

Still, the key lies in translating these promises effectively into action. Reforming entrenched systems takes time, political capital, and cross-sector cooperation. Yet the urgency is undeniable. South Korea cannot afford to wait for the perfect moment. The global AI landscape is evolving rapidly.

For South Korea, the stakes are more than economic. They touch on national identity and the country’s ability to shape its future in an increasingly AI-driven world. Whether the country emerges as a leader or falls behind may depend on the decisions made in the next few years. The groundwork is being laid ― not just for faster computation, but for a new era of growth, equity and innovation.

Yoo Choon-sik

Yoo Choon-sik worked for nearly 30 years at Reuters, including as the chief Korea economics correspondent, and briefly worked as a business strategy consultant. The views expressed here are the writer’s own. ― Ed.


khnews@heraldcorp.com