[AI Pick] Will Naver Emerge as an AI Infrastructure Company Backed by Nvidia?

[AI Pick] Will Naver Emerge as an AI Infrastructure Company Backed by Nvidia?

55MW to operate in 2027…to be expanded to GW-class AI factory in the future

Leveraging Brookfield's capital to lower investment burden and target profitability

Naver has unveiled a detailed blueprint for its AI factory business, which it is pursuing with Nvidia and Brookfield.

The plan is to expand its infrastructure, starting with a 55-megawatt (MW) AI data center in the first half of 2027, to 200MW in 2028, and eventually to gigawatt (GW) class in the long term.

Furthermore, the strategy is to grow its global AI infrastructure business while minimizing asset burden, based on Nvidia's $1 billion equity investment and Brookfield's infrastructure investment.

Naver CEO Choi Soo-yeon explained the AI factory construction schedule, investment structure, and revenue model during the Q2 earnings conference call on the 7th, stating, "We will approach the market as a high-value-added business that combines GPU computing and cloud model operation services."

◇ Nvidia's $1 Billion Investment…Driving AI Factory with Asset Light Strategy

The most notable aspect of this cooperation is Nvidia's decision to invest approximately $1 billion (about 1.4 trillion won) by participating in Naver's third-party allocation capital increase.

Naver CEO Choi Soo-yeon explained during the conference call, "To further solidify this partnership, Nvidia has decided to participate in our third-party allocation capital increase of approximately $1 billion, the first such instance in Asia." She added, "This signifies that the two companies have evolved into a long-term partnership, sharing both business performance and risks, beyond simple technical cooperation."

In addition, the $9 billion (about 12.6 trillion won) in infrastructure construction funds will be secured through the formation of a Special Purpose Vehicle (SPV) with Brookfield, a global asset management firm.

Naver has selected Brookfield as the exclusive preferred bidder and is currently pursuing a formal contract.

CEO Choi stated, "Nvidia handles equipment and ecosystem, the capital partner handles infrastructure investment, and we handle platform operations and customer services. This structure minimizes initial capital burden and lays the foundation for rapid business expansion."

CEO Choi further emphasized, "Based on our full-stack capabilities, from infrastructure to model services, and our proven sovereign AI experience both domestically and internationally, we are approaching this market as a high-value-added business that combines GPU computing and cloud model operation services, going beyond simple computing rental."

This approach is interpreted as minimizing initial risk by reducing Naver's significant financial burden.

◇ AI Computing Demand Grows…Competing with Full-Stack and Sovereign AI

Currently, the global AI data center market is experiencing severe bottlenecks for new entrants due to large-scale power constraints, difficulties in securing land, and issues with cooling facilities and permits.

CEO Choi compared, "Many operators who are just starting construction of data centers are facing bottlenecks due to labor shortages, power supply constraints, semiconductor shortages, and local community opposition to new construction. In contrast, we already have cooperation with Nvidia, partnerships for ready power and land capital, and full-stack operational capabilities accumulated over a long period."

CEO Choi also addressed concerns raised in some parts of the market recently regarding a decrease in AI computing demand.

CEO Choi emphasized, "While there are concerns that computing usage might decrease with the emergence of low-cost, high-efficiency models, we believe that as the unit computing cost decreases, the application of AI, inference, and agents will spread, driving overall computing demand."

Naver is leveraging its sovereign AI references, proven with clients such as Korea Hydro & Nuclear Power, the Bank of Korea, and Korea Aerospace Industries (KAI), as a strength, in addition to its existing data center infrastructure.

CEO Choi added, "While the forms of AI required by each industry differ—such as process innovation in manufacturing sites, closed-network AI infrastructure in the defense sector, AI transformation in public administration, and data security in the financial sector—the demand for reliable infrastructure and technology partners is growing in common."

◇ "AI DC Margin Rate Over 20%"…Confident in Profitability and Risk Management

The success or failure of the AI data center (DC) business depends on chip price volatility, technological obsolescence, and the payback period for initial investment funds.

Regarding this, Naver CFO Kim Hee-cheol stated, "We have conducted many internal reviews on the risks of the AI data center business and examined about four types of risks: demand, execution, finance, and technological changes."

Naver plans to establish a wholly-owned operating company (OpCo) to exclusively manage the AI factory business jointly pursued with Nvidia and Brookfield.

CFO Kim said, "The expected profit margin for the OpCo will vary depending on its maturity. While the margin rate might start a bit lower initially, as the business matures, we fundamentally expect a margin rate of over double digits, moving towards 20% or more."

Regarding chip price drops, CFO Kim explained, "If chip prices halve, the computing infrastructure that can be purchased for the same amount through GPU financing doubles. Since it's not a structure where the entire quantity is contracted at once at current prices with the secured $9 billion, the negative impact of chip price changes on AI data center profitability will be very limited."

As Naver's AI factory business aims for its first operation in the first half of 2027, the key challenge for business success will be to build the planned infrastructure without setbacks and prove profitability by securing stable clients based on the Nvidia ecosystem.