Erik Isakson
By Yan Taw (YT) Boon
Asia is fast becoming a data-center powerhouse, supported by rapid infrastructure growth, significant investment and favorable government policies.
Data centers are increasingly becoming the backbone of our digital future. While the U.S. still boasts the most data center sites globally, an even more exciting story is unfolding in Asia, where rapidly growing economies, increasing population density and the rapidly unfolding AI revolution are spurring the rise of new data center players and regional clusters.
Because AI data centers require vast amounts of space, energy and water for cooling, we believe Asia’s affordable energy and land costs—coupled with supportive government policies—make many Asian outposts ideal locations for these facilities.
Global tech giant Nvidia (NVDA) has partnered with companies in Singapore, Indonesia, India, Vietnam, and Malaysia to strengthen the data center supply chain across the region by leveraging its full-stack AI platform.1 Nvidia’s comprehensive suite of hardware and software solutions is designed to optimize performance and ensure seamless integration among data centers.
Meanwhile, Malaysia’s Johor, located near Singapore, has become a hotspot for data center development, while the cooler and breezier regions of Hokkaido and Tohoku in Japan—which have embraced wind power generation—are also gaining prominence.
Asia’s favorable conditions have attracted global tech leaders seeking to reduce costs and bring services closer to end-users, minimizing latency and enhancing the quality of service. Google (GOOG)(GOOGL) has announced a $2 billion investment to build its first data center and a Google Cloud hub in Malaysia,2 and Microsoft (MSFT) is reportedly investing $3.7 billion in the construction of data centers in Telangana, South India.3
We expect these investments will inject fresh life into the market: According to consultancy Renub Research, the Asia Pacific data center market is projected to surge to roughly $72 billion by 2032, up from nearly $25 billion in 2023—a CAGR of 12.6%.4
Asia’s chip-making prowess already made it a crucial player in the AI revolution. Becoming a data-center powerhouse, in our view, should only further solidify its position as a cornerstone of the global digital landscape.
Sources: (1) Neuberger Berman Research; (2) AP, “Google to invest $2 billion in Malaysian data center and cloud hub”, May 30, 2024; (3) Coin Geek, “US tech majors invest in India data centers, AI innovation”, June 27, 2024; (4) Renub Research, “Asia Pacific Data Center Market Report.”
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