Samsung SDS to build AI-focused data center at Samsung Electronics’ plant

Samsung SDS Co., the information technology service unit of South Korea’s Samsung Group, plans to build an artificial intelligence data center to enhance its presence in the fast-growing AI segment.

According to company sources on Wednesday, the IT service provider has decided to purchase the land and associated buildings of Samsung Electronics Co.'s plant in Gumi, North Gyeongsang province, for 21.5 billion won ($15 million) by the end of this year.

Sources said Samsung SDS is expected to make multi-trillion-won investments to build an AI-centered data center at the plant.

Samsung SDS operates 18 non-AI data centers globally, including five in Korea.

DATA CENTER MARKET TO DOUBLE BY 2030

The company is bolstering its data center business as cloud computing emerges as a core AI system infrastructure.

As companies worldwide scale up their AI initiatives, demand for data centers capable of handling and processing large-scale data has also surged.

According to market research firm P&S Intelligence, the global data center market is forecast to grow to $622.4 billion by 2030 from an estimated $341.4 billion in 2025.

Samsung SDS provides a full spectrum of cloud services, a managed cloud service known as MSP and software as a service called SaaS.

In the third quarter, revenue from the company’s cloud services reached 637 billion won, up 35% from a year earlier.

Its cloud services accounted for 39% of its IT service revenue.

NEW CEO LEE JUNE-HEE TO LEAD AI DATA CENTER INITIATIVE

Last month, the company appointed Lee June-hee, executive vice president of Samsung Electronics’ network business division, as its new chief executive.

During his tenure at Samsung Electronics, Lee played a pivotal role in shaping the technical road map for the Galaxy smartphone series and spearheading the adoption of 5G networks in Galaxy phones.

Analysts said the growing demand for AI infrastructure, especially in the North American market, bolsters Samsung SDS’ AI strategy.

Big Tech companies such as Microsoft, Amazon and Google are investing heavily in data centers to secure cloud computing infrastructure for their AI services.

In September, Samsung SDS said it plans to launch its AI service FabriX on Microsoft’s cloud computing platform Azure to broaden its global user base.

FabriX is a cloud-based generative AI service that connects IT resources such as diverse enterprise data, knowledge assets and work systems to generative AI, to help employees share and use such resources.

Local brokerage firm KB Securities Co. recently said in a report that Samsung SDS is one of its top picks for benefiting from the rise of AI.

Write to Kyung-Ju Kang and Hae-Sung Lee at qurasoha@hankyung.com
In-Soo Nam edited this article.