Naver Cloud will settle in LG CNS's Jukjeon data center. LG CNS announced on the 23rd that it has signed a co-location service supply contract with Naver Cloud for the Jukjeon data center.
The contract amount has not been disclosed due to confidentiality agreements between the two parties, but it is estimated to reach several hundred billion won, exceeding 2.5% of LG CNS's recent revenue (5.9826 trillion won). Co-location services involve installing and using customers’ servers and network equipment in facilities operated by the data center operator, serving as a space rental and management service.
The contract period is about eight years, from this month until May 2033. Naver Cloud will pay the contract fee on a monthly basis.
The Jukjeon data center is a hyperscale facility where Pacific Asset Management has invested 828 billion won with the Canada Pension Plan Investment Board (CPPIB). LG CNS secured the Jukjeon data center project ordered by Pacific Asset Management in March 2022. Of the total two buildings in the data center, one was completed in December last year, and the other is set to be completed in September.
This contract is interpreted as part of LG CNS's strategy to strengthen artificial intelligence transformation (AX). With the advent of the artificial intelligence (AI) era, AI data centers have emerged as a critical future resource for major corporations, and LG CNS plans to accelerate its design, build, and operate (DBO) business with this contract. Naver Cloud will now be able to expand its data center resources for cloud service expansion following its three owned data centers, "GAK."
An LG CNS official noted, "This contract is one of the super-large contracts signed in the data center industry this year," adding, "It is another case that proves LG CNS's technology and operational capabilities as a leading company in the data center market."
Last year, LG CNS's revenue from cloud and AI businesses reached about 3.3518 trillion won, accounting for approximately 56% of total revenue. In the first quarter of this year, relevant revenues increased by 30.1% compared to the same period last year, making up about 59% (717.4 billion won) of total revenue. An LG CNS official explained that "the full-scale revenue from the design, build, and operate business in data centers has been effective in driving revenue growth."
Currently, LG CNS is building and operating data centers in Busan Global Cloud Data Center, Sangam IT Center, and Gasan Center, as well as in global locations including the U.S., Europe, and China. Since 2020, it has been promoting hyperscale data center construction projects with asset management companies, including those in Hanam, Jukjeon, and Samseong, with capacities of tens of megawatts (MW). According to industry sources, LG CNS holds about 60% market share in the design and consulting sector of the data center DBO business.