Market Trends of South Korea Cloud Computing Industry
Government Initiatives to Promote Cloud Adoption to Drive the Market
- As part of its broader National Cloud Strategy, the South Korean government initiated the K-Cloud Project. This initiative seeks to establish a strong domestic cloud infrastructure, encouraging public and private sectors to embrace cloud technologies. The project allocates funds to cloud service providers, enhancing their services and motivating businesses to transition their IT systems to the cloud. The government is spurring innovation and widespread adoption across various industries by cultivating a competitive cloud market.
- In June 2023, the South Korean Ministry of Science and ICT (MSIT) allocated KRW 100 billion (~USD 76.5 million) for the inaugural phase of the K-Cloud Project. This funding aims to enable South Korean data centers to adopt domestically produced artificial intelligence semiconductors by 2030.
- South Korea's government has rolled out policies mandating public sector organizations to adopt cloud services. This initiative encompasses migrating government data centers and IT systems to cloud platforms. Introduced in 2015, the "Cloud First Policy" mandates that government agencies prioritize cloud services for updates or new IT system deployments. As a result, there has been a surge in cloud technology adoption within government entities, and this move has also paved the way for the private sector to follow suit.
- In recognition of the critical role data security plays in cloud adoption, the South Korean government has instituted and actively promotes rigorous cloud security standards. The Korea Internet & Security Agency (KISA) has rolled out the Cloud Security Assurance Program (CSAP), certifying cloud service providers that adhere to defined security benchmarks. By upholding these elevated security standards, the government directly addresses a primary concern for businesses transitioning to the cloud, thus bolstering trust and encouraging wider adoption.
- A 2023 survey by the Korea Information Society Development Institute (KISDI) revealed that approximately 69% of South Korean respondents frequently utilized Naver's NDrive as their cloud service of choice. Following NDrive, Google Drive and Apple iCloud garnered about 28% and 19% usage, respectively. Naver Cloud, a subsidiary of Naver - South Korea's predominant search portal - provides a suite of IT platform services, encompassing storage solutions, IT infrastructure consulting, data center operations, networking, and security services.
Understand The Key Trends Shaping This Market
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IT and Telecom to Hold a Major Share of the Market
- South Korea's telecom industry is rapidly transforming digitally. Major players, including SK Telecom, KT Corporation, and LG U+, are weaving cloud computing into their core operations. By harnessing cloud technology, these firms boost network efficiency, cut operational costs, and roll out advanced offerings like 5G, the Internet of Things (IoT), and AI-driven applications. As these services demand scalable and flexible cloud solutions, the telecom sector is channeling substantial investments into cloud infrastructure.
- For instance, in August 2024, SK Telecom partnered with Lambda, a GPU cloud company founded by AI engineers, to collaborate in the AI cloud business. The two firms plan to set up a substantial NVIDIA GPU cluster to bolster AI cloud ventures in South Korea. SKT and Lambda will install these NVIDIA GPU clusters by year-end at SK Broadband’s Gasan data center in Korea. This setup will utilize Lambda’s cloud computing platform, which is enhanced by NVIDIA technology.
- As a frontrunner in global 5G deployment, South Korea recognizes the pivotal role of cloud computing in ensuring the success of its 5G networks. Telecom giants are tapping into cloud technology to navigate the intricate infrastructure demands of 5G, which encompasses virtualized network functions and edge computing. With cloud computing, telecom operators can adeptly manage the vast data influx from 5G applications, fine-tune network performance, and deliver services with minimal latency. This surge in cloud adoption is propelling significant growth in the telecom sector's cloud market.As of March 2024, South Korea boasted around 33.4 million 5G subscribers, as reported by the Ministry of Science and ICT (South Korea). South Korea rolled out commercial 5G services in April 2019, and the subscriber count has consistently risen since then.
- In South Korea, the IT and telecom sectors are in charge of the development and deployment of IoT and AI technologies. Cloud computing is pivotal in processing and analyzing the massive data influx from IoT devices and AI applications. Notably, telecom companies leverage cloud platforms to provide businesses with IoT connectivity services and AI-driven analytics. As a result, the demand for cloud infrastructure to bolster these technologies is poised to bolster the market share of both the IT and telecom sectors.
