Tech Giants Invest Billions in Southeast Asia's Growing Tech Market, Vietnam Emerges as Attractive Data Center Location

2024-05-30 04:22:12.936000

Tech giants like Apple, Microsoft, and Nvidia are increasingly investing in Southeast Asia, drawn by the region's business-friendly regimes, growing talent pool, and rising incomes. Southeast Asia, with a population of about 675 million people, is attracting more tech investment than ever, with companies set to spend up to $60 billion on data centers in the next few years [14e7e2d5] [fc1e5158]. The region's governments are pro cross-border investments, and Southeast Asia is becoming a major battleground for tech companies in areas such as AI and the cloud [14e7e2d5] [fc1e5158]. Southeast Asia's accelerating AI adoption has the potential to add about $1 trillion to the region's economy by 2030 [14e7e2d5] [fc1e5158]. The region is also a sizeable market for gadgets and online services, with about 65% of Southeast Asia projected to be middle class by 2030 [14e7e2d5] [fc1e5158]. Apple, Microsoft, and other tech companies are expanding their presence in the region and partnering with local governments to train millions of people in AI skills [14e7e2d5] [fc1e5158]. Southeast Asia is expected to become the second largest non-US source of data center revenue in the world by 2028 [14e7e2d5] [fc1e5158].

Vietnam is considered an appealing data center location for technology giants like Google, Amazon, and Microsoft, according to a report by property consultancy JLL Vietnam [435b07af]. The country's strategic geographical location, flexible policies, and young population make it attractive to data center investors. New regulations on cloud computing and data center services, set to take effect in 2025, will provide a flexible and transparent legal framework. The national power development plan will ensure stable power supply for the growing data center industry. Vietnam offers reasonable construction costs compared to other Asian countries. The Vietnamese market is currently dominated by domestic telecommunication companies, but foreign businesses have entered Vietnam due to the growing demand for cloud storage and big data analytic services. Chinese e-commerce giant Alibaba is also considering setting up a data center in Vietnam. However, rapid growth in the data center industry comes with challenges such as data privacy, cybersecurity, and resource consumption management [435b07af].

The robust growth of Artificial Intelligence (AI) applications has been a pivotal driver in the vigorous expansion of the data center infrastructure globally. Projections indicate a continued growth trajectory, with increases in the 7-8% range through 2030. Vietnam's market for IDCs is notably evolving, recognized as one of the top ten emerging markets with an annual growth rate of 13.7%. Current metrics released by the Ministry of Information and Communications reveal that Vietnam houses 32 IDCs, representing merely 1% of the global count. Recent years have seen domestic companies inaugurate new, sophisticated IDCs. Despite these developments, a need for even larger-scale IDCs remains, as pointed out by Minister of Information and Communications. Vietnam's 2023 Telecommunications Law, effective July 2024, now formally recognizes the concept of digital infrastructure. Large IDCs are characterized by a minimum capacity of 5,000 racks. With data doubling every three years worldwide and at an even faster rate in Vietnam, a minimum of three new IDCs yearly is essential to meet the burgeoning demands.

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