British AI infrastructure company Nscale is accelerating its expansion into South Korea, pursuing the construction of multiple AI data centers in the country after establishing a dedicated local entity and reviewing a range of investment approaches, The Seoul Economic Daily has confirmed. The move underscores a broader pivot toward Asia by neocloud operators seeking to diversify regional regulatory risk as data center expansion in the United States faces mounting political headwinds.
Nscale, launched in 2024, is a neocloud operator that procures graphics processing units directly and runs AI data centers with them. The company, valued at approximately $35 billion, or roughly 47 trillion won, is also preparing an initial public offering on a U.S. exchange. According to the Seoul Economic Daily's reporting on the 12th, Nscale established a Korean entity, Nscale Services KR, in July this year. The entity handles data center investment, development, operation and management, and is completing the procedures required to begin operations in Korea.
The company's one confirmed project in Korea is an AI data center in Gumi, North Gyeongsang Province. The original plan called for a consortium to build a 300-megawatt facility in its first phase, but Nscale and the other participant revised the plan so that each would build its own data center. The facility assigned to Nscale is now going through permitting ahead of groundbreaking. The change to the Gumi project has prompted Nscale to pursue additional AI data centers elsewhere in Korea, according to people familiar with the matter. To that end, the company is examining every available approach, including greenfield development of new sites, brownfield conversion of existing facilities and colocation, or leasing space in data centers owned by other companies. Nscale is drawing up its plans on the expectation that Korea's sovereign cloud market will grow rapidly, sources said.
An industry official who asked not to be identified said Nscale has expanded infrastructure overseas by retrofitting older data centers already in operation and installing GPU servers in them to ease the capital burden. "There is a strong chance it will propose this type of partnership to Korean companies as well," the official said.
The push into Korea comes as several major technology firms ramp up AI data center capacity in the country. CoreWeave, a U.S. neocloud company, is also pursuing a data center in Korea and appointed Kim Hyun-seok, who previously worked at Microsoft and SoftBank, as head of its Korean operations last year. Amazon Web Services plans to begin operating an AI data center it is building with SK Group in Ulsan starting next year, while Microsoft recently began construction on its third data center in Korea, in Busan, according to people familiar with the matter.
Industry watchers expect Asia, including Korea, to benefit as the rapid pace of data center construction in the United States slows after the midterm elections. Goldman Sachs estimated that the Democratic Party's wins in state and local elections could subject about 45% of planned AI data center capacity in the United States to regulatory impact. Democratic gubernatorial candidates elected in Texas, Georgia and Ohio have signaled tighter rules on data center construction. On a conference call on the 11th, CoreWeave said it is diversifying regional regulatory risk by expanding overseas operations in Canada, Europe and Asia.
Electricity rates remain the decisive factor for Korea's ability to attract foreign operators. With plenty of alternative sites across Asia, including India, Southeast Asia and Japan, attracting foreign operators depends on how much Korea can cut the enormous power bills that come with running AI data centers, industry officials said. Others say the country needs to make grid connection and permitting timelines more predictable. The government is pursuing a differential pricing system that would vary electricity rates by region, along with a separate rate plan for AI data centers.
An official at a local government that has attracted a foreign operator's AI data center said authorities would like to move quickly to cut electricity rates but cannot set them flexibly because approval from Korea Electric Power Corp. is still required. "For a data center to go beyond its initial operation and add capacity as demand grows, the rules need to be overhauled so that cheaper electricity rates can be guaranteed," the official said.