By HoJun Lee, Head of Arches Korea
As the race for AI dominance accelerates, Korea and Japan stand at a pivotal crossroads, equipped with complementary strengths that could redefine regional tech leadership. While Korea boasts cutting-edge expertise in semiconductors, network hardware, and rapid capital deployment, Japan excels in engineering reliability, advanced energy systems, and access to cooler climates—ideal for hyperscale data centers. Together, these nations can forge a formidable alliance capable of challenging U.S. and Chinese hyperscalers, especially across Southeast Asia.
Emerging initiatives illustrate the promise of this synergy. Japan’s Mitsubishi and JFE are transforming industrial sites into AI-native data centers, while Korea’s SK and AWS are spearheading a KRW 7 trillion Ulsan hyperscale project. Yet, without strategic coordination, these efforts risk becoming isolated victories rather than components of a larger, transformative regional infrastructure. The real opportunity lies in establishing joint frameworks—sharing GPU leasing to optimize scarce compute resources, pioneering cross-border R&D in cooling technologies and modular designs, and developing sovereign-grade facilities in emerging markets like Vietnam and Indonesia.
Globally, investment in AI infrastructure is surging. U.S. hyperscalers are projected to pour over $500 billion into AI data centers by 2025, while Southeast Asia, with Vietnam leading at returns of 17.5–18.8%, emerges as a promising frontier. Despite high-profile projects, Korea struggles with grid and permitting bottlenecks, hampering progress. Conversely, Japan is taking more decisive steps—targeting cooler northern regions and reforming regulations—aiming to fast-track AI-ready infrastructure.
However, policy differences will significantly influence the pace of bilateral cooperation. U.S. export restrictions on GPUs have heightened the urgency for Korea and Japan to localize AI compute capacity, making joint efforts more critical. Southeast Asia’s data localization laws further present collaborative entry points. Additionally, energy sustainability remains a challenge: Korea’s slow renewable integration constrains eco-friendly scaling, whereas Japan is diversifying into ammonia, hydrogen, and offshore wind—potential pillars for an energy-driven AI partnership.
Looking ahead, Korea and Japan could pioneer new models of collaboration. Establishing shared AI infrastructure zones in Southeast Asia under unified regulatory standards would promote compliant, localized cloud and compute services. A jointly financed AI infrastructure development fund—blended from public and private sources—could fast-track greenfield projects while reducing their strategic dependence on the U.S. and China.
"By harnessing their unique strengths and fostering deeper cooperation, Korea and Japan have the potential to set a new regional standard—building a resilient, innovation-driven AI and data infrastructure that could reshape the global technological horizon."
About the Author
HoJun Lee, Head of Arches Korea, took up his position in June 2025 with the opening of the Korean office to expand the company's global presence in the Asian market. Based in Tokyo, he leads Akis' Korean branch, providing international-level insights while fostering the participation of domestic experts in global projects. By building a team that meets Akis' strict international standards for diversity and high performance, he is driving the company's sustained growth and enhanced competitiveness. His expertise lies in cutting-edge technology fields such as AI, data centers, and fintech, where he has focused his career for over a decade. Currently based in Korea, he maintains a close network of experts across Asia, providing deep insights into both domestic and international market trends and the latest industry developments.
You can find the Korean version of this article here.
