Market Trends of South Korea Data Center Construction Industry
Tier 3 Holds Highest Market Share
- South Korea housed 36 data centers, each holding a prestigious tier 3 certification in 2023. The nation's increasing preference for tier 3 data centers stems from their recognized reliability and cost-effectiveness. Notably, South Korea is currently in the process of constructing more than 10 additional data center facilities.
- Leading the charge in this construction boom are Equinix, LG CNS, Empyrion DC, STT GDC Pte Ltd, OneAsia Network, and Stack Infrastructure. Primarily, these data centers are centered in the vibrant Greater Seoul area, with projections indicating that the majority will be up and running by 2027.
- As global conglomerates increasingly prioritize business continuity, they are steering away from tier 1 and 2 facilities, causing a dip in demand for these tiers. This trend underscores a heightened emphasis on tier 3 and 4 data centers.
- A tier 3 data center features redundant power and cooling systems, ensuring uninterrupted services during maintenance. It requires at least three days of independent power supply. The redundant cooling systems prevent overheating, ensuring optimal equipment performance. Tier 3 data centers are lauded for their high data and application availability, reducing downtime. Their redundant systems enable smooth transitions during maintenance, ensuring uninterrupted operations.
- In 2024, South Korea's Ministry of Science and ICT unveiled plans to inject over USD 130 million (KRW 172.9 billion) into enhancing the nation's communication technologies, with a keen eye on ushering in the era of 6G. Of this sum, a notable USD 15.6 million (KRW 20.6 billion) is earmarked for propelling next-gen networks, with a pronounced emphasis on 6G. This strategic move is poised to not only boost the utilization of VOD, online shopping, and smartphone services but also to necessitate an expansion of data center servers, particularly favoring tier 3 facilities, to meet the escalating demand driven by the surging digital connectivity among users.
Understand The Key Trends Shaping This Market
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IT and Telecom Segment to Have Significant Market Share
- South Korea's telecom market, trailing only Hong Kong, leads the way in pioneering communication technologies, notably 5G and 6G. Fueled by robust government support, the market is fiercely competitive yet remains stable. This backing has been pivotal in propelling advanced infrastructure deployments in both fixed and mobile segments. South Korea also boasts two global equipment giants, Samsung and LG.
- South Korea's government recently eased entry barriers for cloud computing services, paving the way for global tech behemoths such as Amazon and Microsoft. This move poses a significant challenge to local industry players.
- KT, Naver, and NHN, leading domestic cloud service providers, voice worries over the increasing influence of foreign competitors. In contrast, tech giants in the United States and China are adapting swiftly to regulatory shifts, actively recruiting cloud computing specialists, particularly for public initiatives, underscoring a surging need for cloud data centers.
- In March 2024, the South Korean Ministry of Science and ICT unveiled an ambitious initiative. The goal is to inject KRW 121.9 billion (approximately USD 91.5 million) into bolstering the nation's cloud computing sector. These developments signal added prospects for local data center construction firms.
