Building AI data centers immediate task for Korea: SK chief

South Korea should work on establishing more artificial intelligence infrastructure to attract global tech firms, otherwise it could be in danger of AI dependence on other countries, said SK Group Chairman Chey Tae-won, who doubles as chairman of the Korea Chamber of Commerce and Industry.

“Among the things that Korea must proactively do in its AI strategy is creating a lot of AI-related infrastructure, starting with AI data centers,” Chey told reporters during a press conference Friday on the sidelines of the 47th Korea Chamber of Commerce and Industry Jeju Forum.

“If we fall too far behind, there is a risk that big tech companies will not choose Korea, and we may end up becoming dependent on other economies leading AI technology,” he said.

Painting the big picture for Asia's fourth-largest economy to leap forward with AI, Chey said SK Group, Korea's chip-to-construction conglomerate, would focus on creating AI infrastructure while online platform firms like Naver and Kakao develop AI-powered software and applications to be commonly used around the world.

Chey's thoughts on AI also reflected on the recent restructuring of SK affiliates. Just a day before his Friday press conference, oil refining company SK Innovation and energy affiliate SK E&S agreed to merge their operations, forming an energy company with assets totaling 100 trillion won ($72 billion).

“AI consumes tremendous amounts of energy. There’s a need for a solution to address high electricity demand for powering AI data centers,” he said. “If the two energy companies (SK Innovation and SK E&S) work together, there will be a higher chance they would find a resolution for that.”

According to Chey, the power required for AI data centers in 2028 will be eight times more than the current level. He pointed out that the carbon emissions currently emitted by data centers is 1.5 times greater than those generated by the entire aviation industry.

Technology development and investment required to keep up with AI evolution are also affecting another part of his group’s business: semiconductors.

Despite consistent market demand for memory with higher speeds and larger capacity, chip companies are struggling to achieve technological breakthroughs. This has led to facility expansion becoming a more important factor in securing semiconductor production capabilities than technological development.

“So now what we have to do is making investments in facilities and keep building more fab (chipmaking fabrication plant),” said the chairman of SK Group which houses the world’s second-largest memory chipmaker SK hynix.

Nonmemory areas are experiencing a similar situation, as chip miniaturization has seemingly reached physical limits.

Chey called on the Korean government to provide subsidies, as the tax benefits it offers are insufficient for semiconductor companies to continue pouring massive investments into facilities. According to the chairman, building one fab costs around 20 trillion won, including the equipment and systems needed for the facility.

“AI is additionally creating considerable demands for higher bandwidth memory. So I’m worried that no matter how much money I make (from chips), I have to invest more money (for facility expansion) than what I earn,” he said.

Chey said Korea will have no choice but to follow the suit of other countries like the United States and Japan, which offer government subsidies to attract global semiconductor companies to build fabs on their own soil.

“The chip industry may face a crisis similar to what happened to the battery sector when the electric vehicle market entered the 'chasm,'” he said, referring to slowing demand in the transition from the early adopter phase to the mainstream market.

“The investment we have to make is a very aggressive amount. The government should develop programs that help companies deal with risks that could emerge in such a crisis.”