Invest1 publisher2 min readPublished
Chey Tae-won moves SK's AI test from speed and scale to payback
The SK chairman told the Ulsan Forum that AI has to generate profits on its own and reinvest them. In the same speech he said the group's Ulsan data centre has added 900 megawatts to a project first sized at 103.
The Investor · Invest desk
What happened
- Chey Tae-won used the Ulsan Forum on the 11th to call for a sustainable structure in which AI generates profits on its own and reinvests them, warning that spending is running ahead of business models.
- He had previously pressed the 3S principles of speed, scale and safety to secure AI infrastructure early, and has now turned management's focus to recovering the resources already committed.
- The Ulsan data centre was first pursued at 103 megawatts and reached a total of one gigawatt this month with the addition of 900 megawatts.
- The site at the Mipo National Industrial Complex is a 7 trillion won project with Amazon Web Services, and Chey said SK has met big tech companies and made considerable progress on it.
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Why it matters
- contradiction Anyone trying to work out whether SK is slowing down gets both answers from one podium: the bubble-deflation warning and the tenfold capacity addition came in the same appearance.
- cost Whoever funds Mipo is underwriting one of two projects that differ by roughly 61 trillion won, depending on whether the published figure was scoped to 103 megawatts or to the gigawatt.
- decision Chey's own standard makes the tenant contract the thing that has to close at Mipo before another capacity number is announced.
- constraint The factory-AI part of SK's revenue case depends on data the group does not hold, because Chey put a national-scale data platform ahead of manufacturing AI's odds of success.
Chey said "Investment is being made at 10 times, 100 times the scale of a typical investment plan" [4]. In the same session he put the Ulsan site at 900 megawatts added on top of a project first pursued at 103 [13][11]. Capacity is up 9.7 times in a month, inside the range he used to describe everyone else's excess [15].
The cost side is less legible. Divide the 7 trillion won attached to the Mipo campus with Amazon Web Services by the full gigawatt and the build runs about 7 billion won per megawatt [10][16]; divide it by the original 103 megawatts and it runs about 68 billion, a rate that implies roughly 68 trillion won for a gigawatt [17][18]. The report gives no phase breakdown and no lease terms [19]. Which of the two it is decides what Chey is asking AI to earn back [2].
For the owner of a data centre, the thing that generates profits on its own is a tenant paying per megawatt over a term. Chey said "We have met with big tech companies and made considerable progress" [12]. AWS is already the partner on the site [10].
The discipline may be real, and it may have arrived before most of the money is spent, which is what dropping speed, scale and safety in favour of recovering committed resources would mean [6]. Or the caution is a negotiating position, handy if you are selling a gigawatt of capacity to hyperscalers and want a longer term at a better price. Or this is a chairman at a forum he proposed himself, now in its fifth year [14], where "If we put all our resources into AI and the returns don't come, it will deflate like a bubble" [7] is a line.
I lean to the negotiating position. Chey moved the management test to recovery of resources already committed [6], and he moved it in the same appearance where he reported the site reaching 900 megawatts [13]. He is talking his sellers toward better lease terms.
I would be shown wrong if the 900 megawatt addition shrinks before construction. That would mean the payback standard bit into a commitment SK had already announced.
What to watch
- Whether SK restates the 7 trillion won figure for the full gigawatt or publishes a separate capex number for the 900 megawatt addition.
- Whether any of the big tech companies Chey said SK has met is named as a Mipo tenant alongside Amazon Web Services.
- Whether SK's next capital commitment in Ulsan comes with a stated payback period attached to it.