By 2030, data center capacity in Southeast Asia is expected to triple to reach between 5.2 gigawatts (GW) and 6.5 GW, a surge which will be fueled by a remarkable tenfold increase in demand for artificial intelligence (AI) computing.
A new BCG report released in October explores the significant growth of Southeast Asia’s data center market in recent years and examines emerging trends shaping the industry’s future, sharing forecasts for the years ahead.
According to the report, between 2019 and 2023, data center capacity in Southeast Asia more than doubled, growing from approximately ~0.8 GW to ~1.7 GW.
This expansion was largely driven by the development of the Singapore-Johor-Batam (SJB) corridor, a key hub for data traffic in Southeast Asia that had witnessed increasing demand for cloud services providers, robust fiber connectivity, and extensive subsea fiber networks connecting to key global and Asia-Pacific (APAC) markets.
The AI revolution to fuel demand for data centers in Southeast Asia
While the data center market has grown significantly over the past four years, the next wave of expansion is expected to be even more dramatic, driven primarily by the rapid rise in AI computing requirements.
BCG forecasts that the global AI market will grow at a compound annual growth rate (CAGR) of 20% between 2022 and 2030 to reach US$2.1 trillion.
This growth will be fueled by several factors, including rising demand for AI-generated content, which requires higher computing power, shifting consumption patterns that necessitate AI-ready data centers, and increasing adoption of diverse AI models designed for accuracy and value generation.
Southeast Asia is uniquely positioned to benefit from this trend. First, the region is home to a young and digitally native population that is readily embracing AI-powered solutions.
This enthusiasm is evident in the significant volume of AI-related online searches in countries such as Singapore, the Philippines and Malaysia ranking among the top globally, according to the e-Conomy SEA 2024 report.
Furthermore, governments in the region are playing a crucial role in fostering AI development by implementing national polities to strengthen AI promotion and governance. Meanwhile, regulatory sandboxes in jurisdictions including Singapore and Thailand allow for experimentation.
Booming data center investments in ASEAN
This supportive environment is cultivating a favorable environment for AI innovation and attracting investment from both local and international players.
In Malaysia, facilities with around 1 GW of power capacity are expected to come online over the next two years. That is double the existing data centre capacity the country currently has. Another 3 GW has also been announced and, if approved, will be gradually rolled out in the next three to five years, the Straits Times reported.
Microsoft is among the tech titans injecting capital into Malaysia, announcing in May a US$2.2 billion investment over the next four years to build cloud and AI infrastructure. Similarly, Amazon Web Services (AWS) unveiled in August plans to invest an estimated US$6.2 billion through 2038 to set up a data center and cloud region in the country.
AWS is also developing a new data center region in Thailand, announcing in May plans to invest US$5 billion through 2027 to develop data centers across the country. The new AWS infrastructure in Thailand, expected to launch in early 2025, represents the company’s fourth region in Southeast Asia after developing similar capabilities in Singapore, Indonesia and Malaysia.
Google is another major player that has set sights on Thailand, committing US$1 billion to build a data center and cloud region in the country.
Meanwhile, Singapore remains Southeast Asia’s data center powerhouse, hosting more than 70 data centers totaling around 1.4 GW of capacity, according to the Infocomm Media Development Authority (IMDA).
The country, which had imposed a three-year halt on data center construction between 2019 and 2022, is now actively expanding its data center industry with plans to increase capacity by more than one-third to meet rising computing needs.
At least 0.3 GW of data center capacity will be added in the next few years, with another 0.2 GW allocated only to operators who use green energy options, the government said in May.
Featured image credit: edited from freepik
