Korea’s SK Telecom pours $200 million into US data center management firm

Korea’s SK Telecom signed a contract to invest $200 million with Smart Global Holdings, a US firm specializing in data center solutions. SK Telecom is South Korea’s largest wireless carrier.

The Korean telecom company wants to penetrate local and international AI data center markets. It plans to leverage Smart Global Holdings’ expertise in the development and operation of AI clusters for data center management systems and immersive liquid cooling systems, according to a report by Korean news agency Yonhap.

SK Telecom will acquire 10% ownership in Smart Global Holdings

As per the agreement, SK Telecom will get a 10% ownership of Smart Global Holdings after acquiring 200,000 preferred shares and their conversion to common stock. This would be the Korean tech giant’s largest investment in the Artificial intelligence (AI) sector.

SKT has invested more than $300 million, including this deal, in the AI sector over the past year. Smart Global Holdings is based in California, and its sales exceeded $1.44 billion last year. In 2017, the company was listed on NASDAQ (the world’s second-largest stock exchange).

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Smart Global Holdings manages AI clusters consisting of high-performance GPU servers and specializes in data center implementation solutions. The firm is also a provider of edge solutions and optimized memory modules for industries.

Chief executive officer of Smart Global Holdings, Mark Adams, said they are thrilled to have SK Telecom as a strategic partner. Adams said his company is looking forward to executing the collaboration opportunities of a strategic nature with the new investor. He added that the partnership will create value for all shareholders.

Smart Global Holdings has installed nearly 75,000 GPUs at different sites. The company also constructed the Research SuperCluster of 16,000 accelerators for Meta. Another firm, Voltage Park, an advanced GPU cloud service provider, also selected Smart Global Holdings to operate its AI cluster, which comprises 24,000 GPUs.

Demand for AI data solution providers is increasing

The Korean telecom giant made the decision to invest in the US firm due to heightening demand for professional AI data center solution providers, according to the report. This is because of the need for large quantities of accelerators to develop large language models (LLMs) with the increasing complexity of building high-tech clusters to power AI models.

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The two companies are planning to work on the collaboration this year while focusing on cooperation throughout the AI infrastructure business. They will emphasize on AI-capable data centers, advanced memory solutions, and edge AI.

Both companies are also looking to develop edge AI solutions for communication to integrate communication networks with artificial intelligence. These solutions will be tailored for industrial-specific edge solutions as both partners are looking to expand globally.

SK Telecom’s CEO, Ryu Young-sang, said the partnership will allow the company to improve its position in the AI value chain. He also hinted at more future investments and collaborations in the AI sector.