Shinsegae, a leading South Korean distribution company, is collaborating with an American artificial intelligence (AI) startup to establish a 250-megawatt (MW) large-scale AI data center in South Korea. This represents the first instance of a local distribution firm directly entering the AI infrastructure sector, according to Shinsegae. The company aims to use this project to expand AI as a key future business and speed up the adoption of “AI commerce,” incorporating AI technology into shopping, logistics, and payment processes.
Shinsegae entered into a memorandum of understanding (MOU) with the U.S. artificial intelligence startup Reflection AI in San Francisco, California, on the morning of the 16th (local time), aiming to establish an AI factory. The data center, which covers 250 MW, will need energy equivalent to that used by about 250,000 homes at the same time. Shinsegae referred to it as “the largest AI-specific data center to be constructed by one company in South Korea.” The IT sector estimates that building the facility and its internal systems will cost more than 10 trillion South Korean won. U.S. Secretary of Commerce Gutierrez remarked, “We will strongly support the successful completion of this project.”
◇”Biggest Artificial Intelligence Data Center Constructed by One Corporation”
Shinsegae intends to become a cloud service provider by working with Reflection AI to develop an AI data center with a capacity of 250 MW in South Korea. Shinsegae will take charge of the construction process, including choosing the location, managing the facility, and securing power supply. Once completed, it will offer AI cloud services to businesses and government entities in South Korea. Reflection AI will provide GPU infrastructure design, AI models, and service technologies for the data center. In addition to standard cloud services, the collaboration seeks to deliver customized AI models and systems that meet specific client requirements, leveraging Reflection AI’s technology.
Shinsegae stated that this MOU marks the initial agreement under the “U.S. Government AI Export Program,” which aims to package and export the U.S. artificial intelligence technology ecosystem—covering AI models, chips, and data center design and operational technologies—to allied countries. This highlights the U.S. government’s goal to position its AI technologies as a global benchmark, similar to how Microsoft’s Windows once dominated. Nevertheless, details such as the location of the data center, the investment sum, and the expected completion date have yet to be determined.
◇Shinsegae Enhances Operations Through Artificial Intelligence Systems
Reflection AI, which is working with Shinsegae to create a large AI data center in South Korea, was established in 2024 by Ioannis Antonoglou, who previously served as the Chief Technology Officer (CTO) at Google DeepMind and was the main developer of AlphaGo. The company focuses on developing AI models and AI agents (virtual assistants). Although it hasn’t launched any models or products yet, it has secured funding from NVIDIA and others, reaching a corporate valuation of $8 billion (about 12 trillion Korean won) in October last year. Shinsegae mentioned that collaborating with Reflection AI, an investment of NVIDIA, will ensure a steady supply of required GPUs. Shinsegae stated, “Unlike closed models that do not share any details about model structures or training data, Reflection AI creates ‘open-weight’ AI models that share some information. This infrastructure allows clients to adjust model structures for specific needs and independently handle data, offering benefits for maintaining data sovereignty.” Shinsegae highlighted, “The planned AI data center’s capacity (250 MW) is the biggest for an AI-specific facility constructed by one company in South Korea.” The companies intend to form a joint venture during the second half of this year.
Shinsegae mentioned that to complete the MOU, it has continuously strengthened ties with the U.S. government and the AI sector to investigate potential partnerships. By joining the U.S. government’s AI export initiative, Shinsegae may be eligible for assistance like reduced-interest loans from the U.S. government in the future.
◇Creating Shopping AI Agents as Well
Shinsegae intends to increase the use of artificial intelligence throughout all its business sectors, beginning with the AI data center initiative. In the online shopping sector, Shinsegae encounters challenges from Coupang and budget-friendly Chinese e-commerce sites, while its E-Mart and duty-free operations are also experiencing difficulties. Within this scenario, AI is being viewed as a key driver for future growth.
Shinsegae is working on an AI assistant that suggests customized products to shoppers on its e-commerce platform and manages payments and deliveries. A company representative mentioned, “We aim to create a unique ‘AI commerce’ model using customer data collected over many years.” Furthermore, AI will be implemented in logistics, delivery, inventory control, and other processes to improve efficiency. Chung Yong-jin, Chairman of the Shinsegae Group, remarked, “Businesses that do not incorporate AI will struggle to survive in the future. This initiative will not only support Shinsegae’s future development but also help advance the AI ecosystem across various sectors in South Korea.”
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