Korea Aims for Top 3 in Artificial Intelligence, but Special Act on Data Centers Stalls

As the global race for AI supremacy shifts into a competition over infrastructure centered on power, semiconductors, and AI data centers, Korea, which has set "Top 3 in Artificial Intelligence" as a policy goal, is rapidly pivoting its national AI strategy from technology development to AI infrastructure build-out.
However, observers point out that structural limits in the speed of policy implementation and institutional reform are becoming obstacles in the race to secure competitiveness in the AI industry.
■ "AI Highway" strategy elevates AI to national infrastructure
Through the Framework Act on the Development of Artificial Intelligence, which will take effect in 2026, the government is joining the global AI power race by defining AI not as an individual industry but as core national infrastructure.
In particular, under the "AI Highway" strategy, a key campaign pledge of President Lee Jae-myung, the government has made the expansion of hyperscale AI data centers and cloud infrastructure, along with securing Graphics Processing Unit (GPU) resources, the central pillars of its policy and is concentrating efforts on ramping up infrastructure investment.
It plans to induce about 100 trillion won in private investment over the next five years in new industries such as AI data centers and power grids.
In the private sector, the AI ecosystem is gradually taking shape around AI data center construction and semiconductors.
Large-scale AI data center projects are being launched one after another in both the greater Seoul area and regional cities, while urban and distributed infrastructure is being built in parallel.
There is also growing momentum to form regional AI infrastructure clusters.
Around these data centers, an industrial ecosystem that combines power, telecommunications, and cloud services is beginning to take full shape.
■ AI data centers and semiconductors make Korea a key AI supply chain hub
SK Telecom stated, "In the AI era, competitiveness depends not only on technology but also on how you design and connect infrastructure," and has declared itself an AI infrastructure company, throwing its weight behind the spread of AI infrastructure.
Last year, it broke ground on the Ulsan AI Data Center in partnership with Amazon Web Services (AWS), and it now plans to build a hyperscale AI data center in the Southwestern Region of Korea together with OpenAI.
The company has also advanced to the second phase of the government's "Sovereign AI Foundation Model Project" and is working to secure Sovereign AI capabilities through its own AI model, A.X K1.
Naver Corporation is expanding its ecosystem around the Naver Data Center GAK Sejong, while Kakao Corp. is simultaneously investing in AI model development and cloud infrastructure.
In semiconductors, Samsung Electronics and SK hynix Inc. are playing a central role by securing global competitiveness in the High Bandwidth Memory (HBM) market for AI.
Global investment banks are assessing that "Korea is emerging not just as a demand market in the AI infrastructure race, but as a key country in the supply chain."
■ Special Act on AI Data Centers hits a snag, urgent need for a package-style policy decision
Yet behind this growth, structural constraints are becoming apparent. The biggest issue is power. AI data centers consume enormous amounts of electricity, while Korea's power grid is already close to saturation. Because of power system impact assessments and a lack of transmission and distribution infrastructure, locations for new data centers are limited. To address these issues, the Special Act on AI Data Centers was proposed, but it has been put on hold due to disagreements among government ministries. The core point of contention is the scope of allowing direct power transaction, or Power Purchase Agreement (PPA). The Ministry of Trade, Industry and Energy views AI data centers as national strategic facilities and argues that they should be broadly allowed to sign direct power contracts with power generators. The ministry contends that global big tech companies are securing long-term, low-cost electricity through renewable energy PPAs, and that without similar conditions, it will be difficult to attract investment into Korea. The Ministry of Economy and Finance, on the other hand, is concerned about potential distortions in the power market and a possible decline in tax revenue. It argues that granting special electricity tariffs to specific industries would raise fairness issues and, in the long run, could increase the financial burden on state-run power companies. Easing location regulations is another contentious issue. The Ministry of Trade, Industry and Energy and some local governments argue that regulations should be relaxed and data centers dispersed to regional areas to reduce concentration in the Seoul metropolitan area. The Ministry of Environment, however, believes environmental impact assessments should be strengthened, given that data centers consume large amounts of power and water. In particular, the use of cooling water and the issue of heat emissions are directly tied to local community acceptance. On tax incentives, the Ministry of Science and ICT maintains that AI infrastructure should be designated as a "national strategic technology," similar to semiconductors, so that tax credits can be expanded. By contrast, the Ministry of Economy and Finance is seeking to limit the scope of such benefits, citing the need to maintain fiscal soundness.