Hyundai Engineering & Construction (000720.KS) is establishing a Japanese subsidiary to tap the local advanced-industry infrastructure market, which is growing rapidly on the back of an artificial intelligence (AI) boom. The company plans to first enter the AI data center (AIDC) market and then expand into energy infrastructure such as nuclear power and small modular reactors (SMRs).
Hyundai E&C Sets Up Japan Unit, to Apply for Construction License in Q3
Hyundai E&C plans to apply for a specified construction license in Tokyo in the third quarter of this year, according to the construction industry Monday. After establishing its Japanese subsidiary, "Hyundai E&C Japan," in Marunouchi, Tokyo's central business district, in February, the company has completed hiring a management responsibility officer and a Japanese first-class architect — essential requirements for the license — and is currently undergoing internal approval procedures at its headquarters. While Hyundai E&C previously operated a Tokyo office and cooperated with local construction firms, this is the first time it is pursuing a Japanese construction license to win large-scale projects.
"We plan to first build the organization around essential personnel such as a management responsibility officer and a first-class architect, then gradually expand local staff in line with business growth," a Hyundai E&C official said. "We will actively seek business opportunities not only in AIDC, where demand is rapidly increasing, but also in energy infrastructure areas such as nuclear power and SMRs."
Hyundai E&C's entry into the Japanese market comes as expanded AI investment shows signs of breaking down the high entry barriers of Japan's construction market. As data center and semiconductor plant construction by global big tech and Japanese companies concentrates simultaneously, Japan's major construction firms have reached the limits of their construction capacity, opening opportunities for foreign builders. According to market research firm Mordor Intelligence, Japan's data center construction market is projected to grow from $7.59 billion this year to $10.9 billion by 2032.
"Not a Task Force but a Global Data Center Team"...Actively Seeking Overseas Markets
To seriously seek overseas revenue sources, Hyundai E&C established a Global Data Center Team within its Building & Housing Business Division in March this year. New businesses are usually approached at the task force (TF) level, but elevating it to a formal team reflects Hyundai E&C's determination to find future revenue sources. Earlier, at Hyundai E&C's first Investor Day held in March last year, CEO Lee Han-woo presented an energy package strategy combining data centers, large nuclear power plants, and SMRs. Since power infrastructure is essential to operate data centers, the plan is to export not just data center construction but also power supply and energy infrastructure together.
Japan's emergence as an AIDC hub is also driven by its locational competitiveness. Japan is regarded as a market with the advantages of a stable power grid, renewable energy, earthquake-resistant infrastructure, and its status as an Asian internet hub. In the Tokyo metropolitan area, hyperscale data centers are concentrating based on financial and cloud demand, while Osaka has rapidly emerged as an alternative base to disperse the capital region's power shortages. Hokkaido is drawing attention as a next-generation AIDC candidate site, as its cool climate and abundant renewable energy can reduce cooling costs.
Korean companies also view Japan's infrastructure competitiveness highly. SK Group Chairman Tae-won Choi recently evaluated in an interview with Japanese media that "Japan has all the ecosystems needed for AI infrastructure, such as power and materials, making it an excellent candidate site for semiconductor plants."
Japan's AIDC Demand Explodes...Construction Bottleneck Becomes Opportunity
As global big tech successively announces plans to build large-scale AI data centers (AIDC) across Japan, infrastructure demand is rising sharply. At the former Sharp plant site in Sakai, Osaka Prefecture, KDDI's latest data center began operations in January this year. Equipped with Nvidia's latest semiconductors, the facility has a power capacity of 48 megawatts (MW). SoftBank is also building a 150 MW data center in Sakai, targeting completion within the year, and is pursuing a large project in Hokkaido as well. Local governments such as Toyama Prefecture and Kagoshima Prefecture are also considering building ultra-large data centers of 350 to 400 MW in partnership with regional companies. Japan's Ministry of Internal Affairs and Communications expects Japan's AI-related market to grow to about 4.2 trillion yen by 2029, roughly triple last year's level.
However, the supply bottleneck is clear. Japan's major construction firms (general contractors) have their personnel and equipment concentrated on the Kumamoto plant that TSMC is pursuing and on semiconductor and advanced-industry projects. While data center construction targets are growing in scale from tens of MW to hundreds of MW, there is a view that construction capacity to build them on time is insufficient. A local Japanese official noted, "AIDC demand is surging, but there is a shortage of mid-sized and larger construction firms that can handle it. Unlike before, Korean construction firms actively targeting the Japanese market reflects a judgment that there is opportunity."
Hyundai E&C Matches Japanese General Contractors in Scale
Hyundai E&C has already steadily built up construction references in the data center and nuclear power sectors. It was selected as the preferred bidder for the Pohang AIDC project, which is being pursued with a target of commercial operation in October next year, and is also carrying out major projects such as the Hangdong data center in Guro-gu, Seoul, and the Seongwoo-dong, Ansan and Sihwa data centers. Since AIDC requires high-difficulty technical capabilities such as large-capacity power supply, cooling, and earthquake-resistant design, analysts say such experience will be a weapon for its entry into the Japanese market.
Some analysts say Hyundai E&C does not lag in scale even compared to Japan's major construction firms with advanced infrastructure construction capabilities. Japanese major construction firms Kajima Corporation and Obayashi Corporation posted revenues of 2.9 trillion yen (about 27 trillion won) and 2.6 trillion yen (about 24 trillion won) respectively last year, less than Hyundai E&C's revenue last year (about 31 trillion won). In addition, having combined experience in constructing nuclear power plants, plants, and data centers is cited as a differentiated competitive edge in the AI infrastructure market.
Korean construction firms are broadening their points of contact with Japan. Samsung C&T's construction division obtained a Japanese construction license through its Tokyo corporation in 2023 and has been expanding cooperative businesses with local Japanese companies. Recently, it signed a memorandum of understanding with Japan's Infroneer Holdings for cooperation in global public-private partnership (PPP) and concession projects, strengthening a cooperation model centered on development, investment, and operation. Daewoo E&C first pioneered the Japanese market in the 1990s and carried out large projects such as Fukuoka Canal City, but currently does not operate a separate Japanese branch. Instead, it continues cooperation through joint bids in third countries, such as carrying out the Jazan Refinery project in Saudi Arabia together with Japan's JGC.
An industry official said, "AIDC is likely to become a market that moves together with energy infrastructure such as nuclear power, transmission and distribution networks, and energy storage systems (ESS) going forward. If it breaks through the infrastructure supply bottleneck with advanced construction capabilities, there is ample opportunity."
Asia Emerges Prominently at Center of Construction Firms' Orders
The overseas order landscape of Korean construction firms, once centered on Middle East plants, is rapidly changing. As advanced-industry infrastructure such as AI data centers and semiconductor plants emerges as a new overseas revenue source, Asia is rising as a key market for overseas orders.
An analysis of statistics from the International Contractors Association of Korea showed that Korean construction firms' overseas orders in the Asia region from January to May this year reached $1.85 billion, up 17% from $1.58 billion in the same period last year. During the same period, while Middle East orders fell by about 90%, Asia led overseas orders as advanced manufacturing facility and AI infrastructure projects were successively concluded.
A representative project is the Malaysia SGW1A AIDC that Samsung C&T won in May, worth a total of $217 million (about 331.5 billion won). Samsung C&T also won a project to build a Samsung Electronics semiconductor plant in Vietnam for $151 million (about 229.1 billion won).
New markets are also opening successively. POSCO E&C won the TTT Chang Ethane Terminal project in Thailand, where it had no orders last year, for $317 million (about 484.2 billion won). Incheon International Airport Corporation won the modernization and operation project for Urgench International Airport in Uzbekistan through a public-private partnership (PPP) worth $134 million.
