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Yahoo
18-04-2025
- Business
- Yahoo
Malaysia aspires to provide the backbone of the global AI boom. Will the bet pay off?
The jungles of Johor, the Malaysian state across the Johor Strait from Singapore, were first cleared in the 1840s by Chinese clans from Singapore seeking more space to grow black pepper. In the next century, under British rule, those pepper farms gave way to vast plantations of rubber and oil palm trees. On many of those same sites today, Johor is cultivating a new kind of cash crop: data centers meant to feed the world's voracious appetite for artificial intelligence. Johor's data center boom, like the shift to growing pepper, is partly a function of scarcity in Singapore. The tiny city-state is Southeast Asia's digital hub. But it imports both water and power, and in 2019 imposed a moratorium on building data centers because the hulking facilities were guzzling water and consuming 7% of Singapore's electricity. Investors and operators of data centers flocked to neighboring Malaysia, where land is cheap, energy is abundant, and the government is eager to jump-start development of the nation's digital economy. But Johor's rise as a data center powerhouse is also driven by the global scramble for computational power. Singapore rescinded its data center ban in January 2022, but the release of ChatGPT later that year triggered an explosion in global demand for AI infrastructure—and ignited a new investment frenzy in Malaysia. In 2023, Malaysia reaped more than $10 billion in investments for data centers, then tripled that in 2024, making the country the world's hottest destination for data center investments in both years, according to property consultancy Knight Frank. Johor is the epicenter of that construction surge. For the state, and for Malaysia, the big question is whether this flood of capital and expertise will carry their broader economies to a new era of high-tech growth—or whether other challenges, like shifts in global demand and constraints in local resources, will turn their data centers from cash cows to liabilities. Johor hosts more than 40 data centers that are either operational or under construction, according to advisory firm Baxtel, up from about a dozen in 2022. Many more are in the planning stages. Data center capacity, measured in how much power the facilities can provide, surged to over 1,500 megawatts last year, up from 10 megawatts three years earlier, according to data center market intelligence platform DC Byte. If expansion continues at its current breakneck pace, Johor could overtake Northern Virginia as the world's largest data center corridor within the next five years. 'Johor is adding data center capacity at a speed and scale I've not seen ever anywhere else in the world,' says Rangu Salgame, CEO of Princeton Digital Group, a Singapore-based data center operator. Princeton Digital, whose backers include private equity giant Warburg Pincus, last year launched the first phase of a $1.5 billion, 150-megawatt data center campus in a massive tech park 40 miles inland from the Singapore-Johor border crossing—and plans to add a second, 200-megawatt campus at a business park a few miles up the road. The parade of companies piling in with multibillion-dollar investment announcements in Johor also includes global tech leaders like Nvidia, Microsoft, Alphabet, and Oracle, plus data center operators such as California's Equinix, Japan's NTT Data, and China's GDS Holdings. 'Three years ago,' says Salgame, 'if you'd asked CEOs of the global tech giants about Johor, they'd have never heard of it, much less be able to find it on a map. Now, everyone is here.' It's no accident that the advent of large language models (LLMs) in the U.S. and China has sparked a data center bonanza in faraway Malaysia. In the pre-ChatGPT era, for many of the services handled by data centers, there was an enormous advantage to operating from facilities physically close to end users. For functions like online gaming, stock trading, fraud detection, social media, or streaming videos, every millisecond counts. Companies providing such services pay huge penalties for 'latency'—sluggishness in the time it takes for data to travel between a user's device and the data center and back. In contrast, training LLMs isn't interactive. Instead of sending requests and waiting for real-time responses, it involves running long, continuous computations on fixed datasets. The process can run for days or weeks without needing rapid back-and-forth communication. When latency isn't a concern, AI companies can instead prioritize efficiency—cheap and abundant power and land—and locate data centers thousands of miles from where the models are designed or meant to be used. That means Malaysia's AI data centers can compete not only with those in Singapore or other Southeast Asian neighbors, but also with similar facilities worldwide. Malaysian Prime Minister Anwar Ibrahim has welcomed the data center boom and is rolling out strategic initiatives, including tax breaks and streamlined approval procedures, to position the nation as a global AI hub. A critical part of that push is the Green Lane Pathway, a 2023 initiative launched by Tenaga Nasional Berhad, Malaysia's primary electricity utility, that aims to reduce the time required to connect data centers to the power grid to 12 months, down from more than three years prior. There are signs the data center boom is straining Malaysia's resources—for some of the same reasons the facilities were temporarily banned in Singapore. Malaysia, like Singapore, is one of the most water stressed countries in the world. Malaysia's National Water Services Commission has warned that the country could face widespread water shortages in the next five years owing to climate change and aging infrastructure—even without factoring in increased demand from data centers. Power, too, is an issue. A medium-size data center might have a capacity of 40 to 50 megawatts, enough to consume as much electricity in a year as about 125,000 homes, depending on usage. Large hyperscale AI processing centers can require as much as 500 megawatts continuously, consuming more electricity annually than the roughly 250,000 households in Johor's largest city, Johor Bahru. Malaysia's position on the equator means that its data centers also require far more energy to cool than facilities in northern countries with colder climates. At a recent investor conference, Johor Bahru Mayor Mohd Noorazam Osman acknowledged concerns about water and power shortages. 'People are too hyped up about data centers nowadays,' he said. 'The issue in Johor is we do not have enough water and power. I believe that while promoting investments is important, it should not come at the expense of local and domestic needs of the people.' The Malaysian government says it expects data centers operating in the country to pay a premium for water and power; early indications suggest tech companies and operators are willing to do so. Authorities last year rejected the applications of a handful of data center projects for failure to comply with efficiency and sustainability standards. The rapid increase in power demand from data centers could prove a boon if it accelerates Malaysia's transition to renewable energy. In 2020, only about 4% of Malaysia's power came from renewable sources. That percentage is expected to rise above 30% this year, according to the Malaysian Investment Development Authority, and the government has vowed to increase the share of renewable energy in total generation capacity to 70% by 2050. In Johor, authorities are thinking big. Princeton Digital's first data center campus is located in Sedenak Tech Park (STeP), a 700-acre digital hub owned by the property arm of JCorp, a state-owned conglomerate, on a site that was once part of a sprawling palm oil plantation. In addition to the Princeton hub, STeP includes a 300-megawatt hyperscale data center campus being built by Amsterdam's Yondr Group, and a third, under development by Japan's Mitsui & Co., that will include an on-site solar farm. STeP, already Malaysia's largest data center complex, is about to get bigger. JCorp is developing a second phase, STeP 2, that will add another 640 acres to the park, and has plans for a 7,000-acre township that will include R&D facilities, residential areas, and culture and rec centers. JCorp also has engaged Zaha Hadid Architects to design a 500-acre innovation hub called Discovery City that will integrate digital technologies and sustainable living. The proliferation of such projects is transforming Johor, Malaysia's southernmost state. Johor and Singapore are connected by two land crossings, Woodlands and Tuas Link, that are among the busiest and most congested border crossings in the world. The Singapore side is densely populated and carefully organized, with tolls and customs digitized. The Johor side is bustling and chaotic, with far more motorcycles, small cars, and buses. "Johor is adding data center capacity at a speed and scale I've not seen ever anywhere else." In January, Johor signed a 'special economic zone' agreement with Singapore to promote cross-border cooperation between the two economies. The motorbike-loving billionaire sultan of Johor, currently Malaysia's king under the country's rotating monarchy system, is championing the effort to bring his state and Singapore closer together. The agreement includes tax breaks, enables smoother cross-border trade, and makes it easier for skilled labor to move back and forth across the border. It's unclear whether data centers will generate more and better jobs for Johor. Most data centers provide about 30 to 50 permanent jobs. Larger facilities might create as many as 200. But on their own, data centers seem unlikely to significantly boost overall wealth in Johor, where the GDP per capita is about $10,000 compared with nearly $85,000 in Singapore. Nor is it clear that Malaysia can use the development of data centers to attract other tech industries such as chip manufacturing. The larger risk is a global data center bubble. The so-called DeepSeek Shock (China's breakthrough AI model that rattled Wall Street) could reduce the scale and demand for data centers everywhere if an overhaul of AI models to match DeepSeek's low-cost approach reduces demand for cutting-edge chips, expanded power plants, and large-scale data centers. Salgame, for his part, says he is 'not the least bit worried' about flagging demand for computational power from the data centers Princeton Digital is building in Johor. Cheaper, more efficient AI models will only accelerate the world's use of AI—and the need for low-cost AI training centers in places like Johor. 'This is only the beginning,' he says. This article appears in the April/May 2025: Asia issue of Fortune with the headline "Malaysia's data center power play." This story was originally featured on
Yahoo
10-02-2025
- Business
- Yahoo
Data Center Market in UK to Grow by USD 37.87 Billion from 2024-2028, Driven by Multi-Cloud Adoption and 5G Network Upgrades, AI's Impact on Trends
NEW YORK, Feb. 10, 2025 /PRNewswire/ -- Report on how AI is redefining market landscape - The Data center market in UK size is estimated to grow by USD 37.87 billion from 2024-2028, according to Technavio. The market is estimated to grow at a CAGR of 21.8% during the forecast period. Growing adoption of multi-cloud and network upgrade to support 5G is driving market growth, with a trend towards consolidation of data centers. However, increasing power consumption poses a challenge. Key market players include Inc., Baxtel, Cisco Systems Inc., CyrusOne LLC, Cyxtera Technologies Inc., Digital Realty Trust Inc., DXC Technology Co., Equinix Inc., Switch Ltd., Hewlett Packard Enterprise Co., Huawei Technologies Co. Ltd., International Business Machines Corp., Iron Mountain Inc., Microsoft Corp, Nippon Telegraph and Telephone Corp., Oracle Corp, SAP SE, Verizon Communications Inc., and Virtus. AI-Powered Market Evolution Insights. Our comprehensive market report ready with the latest trends, growth opportunities, and strategic analysis- View Free Sample Report PDF Forecast period 2024-2028 Base Year 2023 Historic Data 2018 - 2022 Segment Covered Component (IT infrastructure, Power management, Mechanical construction, General construction, and Security solutions) and Geography (Europe) Region Covered UK Key companies profiled Inc., Baxtel, Cisco Systems Inc., CyrusOne LLC, Cyxtera Technologies Inc., Digital Realty Trust Inc., DXC Technology Co., Equinix Inc., Global Switch Ltd., Hewlett Packard Enterprise Co., Huawei Technologies Co. Ltd., International Business Machines Corp., Iron Mountain Inc., Microsoft Corp, Nippon Telegraph and Telephone Corp., Oracle Corp, SAP SE, Verizon Communications Inc., and Virtus Key Market Trends Fueling Growth The Data Center market in the UK is experiencing significant growth due to the increasing adoption of cloud computing, multi-tenant data centers, and digital transformation. Businesses of all sizes, from large enterprises to small businesses, are leveraging cloud solutions for cost savings and flexibility. The rise of the Internet of Things, eCommerce, and digital content is driving the need for more data storage and transmission. Multi-tenant data centers, hyperscale data centers, and edge computing are becoming popular trends, with an emphasis on energy efficiency and eco-friendly solutions. Remote working and 5G networks are also driving the demand for data centers closer to the edge. Hybrid cloud solutions, smart city infrastructure, and AI technologies like machine learning and deep learning are transforming industries such as IT & Telecom, healthcare, manufacturing, and cybersecurity. Tier 3 data centers, colocation, and interconnection platforms are essential for businesses seeking to improve data management and security. The market is witnessing the emergence of modular data centers, prefabricated solutions, and low-latency applications to support the growing demand for real-time processing and high-performance computing. The future of data centers lies in hyper-scalability, automation, and green energy initiatives. Data center consolidation is a trending business strategy among enterprises in the UK, driven primarily by the need to reduce operational costs. High power consumption and carbon emissions leading to increased operational expenses have encouraged many organizations to consolidate their data centers. This consolidation can result in cost savings of up to 30%, enhanced security up to 35%, improved efficiency by 50%, and reduced power consumption by 55%. Various enterprises are implementing this strategy by consolidating existing facilities, moving operations to colocation data centers, and adopting cloud-based services. For instance, National Grid recently selected Wipro for data center consolidation and the implementation of a next-generation hybrid cloud architecture in the UK. Insights on how AI is driving innovation, efficiency, and market growth- Request Sample! Market Challenges The Data Center market in the UK is experiencing significant growth due to the increasing demand for cloud computing, multi-tenant data centers, and digital transformation. Businesses of all sizes, from Large Enterprises to Small Enterprises, are adopting cloud solutions for their eCommerce platforms, digital content, and IoT applications. The rise of 5G networks and edge computing is driving the need for micro data centers and hyperscale data centers. Challenges such as energy efficiency, data security, and asset performance management are top priorities for colocation service providers and hyper-scale operators. The adoption of AI, machine learning, and automation is essential for managing digital data and ensuring the reliability of electrical and mechanical infrastructure. The market is also witnessing the emergence of green data centers and eco-friendly solutions, as well as the integration of generative AI, deep learning, and high-performance computing for data storage and real-time processing. The IT & Telecom, Healthcare, Manufacturing, and Cybersecurity sectors are leading the way in the adoption of these technologies. Colocation services, interconnection platforms, modular data centers, and prefabricated solutions are becoming increasingly popular for their flexibility and scalability. The market is expected to continue growing as businesses seek to optimize their IT infrastructure and improve their digital capabilities. The UK data center market is experiencing substantial growth due to increasing data traffic from Internet penetration, social media usage, automation technologies, smart city initiatives, and AI adoption. Servers and cooling solutions in data centers account for a significant portion of electricity consumption. Energy scarcity is a pressing issue globally, and the UK faces power production and consumption gaps. Large enterprises operate data centers to power millions of users for business continuity, leading to high energy consumption and power costs, as well as environmental concerns such as carbon emissions. Insights into how AI is reshaping industries and driving growth- Download a Sample Report Segment Overview This data center market in UK report extensively covers market segmentation by Component Geography 1.1 IT infrastructure- The Data Center IT infrastructure market in the UK consists of server infrastructure, storage infrastructure, software-defined data centers (SDDCs), network infrastructure, converged infrastructure, data center automation software, data center backup and recovery software, and DCIM solutions. The demand for these IT infrastructure components is increasing due to the growing need for computing power and storage to support expanding data traffic. Enterprises in the UK are transitioning to cloud technologies, moving their data from on-premises data centers to cloud-based alternatives. This trend is anticipated to boost the demand for servers, storage infrastructure, and other IT equipment during the forecast period. Additionally, investments in providing cloud solutions using hyperscale data centers (HDCs) are on the rise, such as SAP SE's recent £220 million investment in the UK for its SAP UK data cloud. The advantages of HDCs, including high scalability, cooling efficiency, and workload balancing, are becoming increasingly valuable. The number of HDCs is projected to grow, leading to increased demand for data center IT infrastructure and related solutions worldwide. The COVID-19 pandemic has accelerated the adoption of cloud services and digitization, further fueling the need for advanced IT infrastructure in the UK. Download complimentary Sample Report to gain insights into AI's impact on market dynamics, emerging trends, and future opportunities- including forecast (2024-2028) and historic data (2018 - 2022) Research Analysis The Data Center market in the UK is experiencing significant growth due to the increasing demand for cloud computing, multi-tenant data centers, and digital transformation. Businesses across industries are adopting cloud solutions for their operations, leading to an increase in the demand for data center services. The Internet of Things (IoT) and eCommerce sectors are major contributors to this trend, generating large amounts of data that require secure and efficient storage and processing. Big data, digital content, and high-performance computing are driving the need for advanced electrical and mechanical infrastructure in data centers. Remote working and 5G networks are also fueling the growth of the market, as more businesses rely on cloud services for their day-to-day operations. Data security is a major concern for organizations, leading to the adoption of colocation, hyperscale, and enterprise data centers. Data Center Rating systems are being used to evaluate the efficiency and sustainability of data centers. The market also includes micro data centers and corporate data centers, as well as server storage devices, networking equipment, and digital data. Advanced technologies such as Generative AI, Deep Learning, and High-Performance Computing are being used in data centers for various applications, including data analysis and processing. Hybrid cloud and multi-cloud solutions are also gaining popularity, providing businesses with more flexibility and scalability. Market Research Overview The Data Center market in the UK is experiencing significant growth due to the increasing demand for cloud computing, multi-tenant data centers, and digital transformation. With the rise of big data, Internet of Things (IoT), eCommerce, and digital content, there is a need for more efficient and scalable data center solutions. This has led to the emergence of various types of data centers such as hyperscale, edge, micro, and Tier 3 data centers. Energy efficiency and eco-friendly solutions are becoming essential as data centers consume vast amounts of electricity. The adoption of renewable energy sources, generative AI, and deep learning is helping reduce carbon emissions. The market is also witnessing the deployment of 5G networks, which require low-latency applications and edge data centers to support the growing number of smartphones and IoT devices. Hybrid cloud solutions, colocation services, and interconnection platforms are becoming popular as businesses seek to manage their digital data securely and efficiently. Moreover, the healthcare, manufacturing, IT & telecom, and cybersecurity industries are investing heavily in data centers to support their digital transformation initiatives. The market is expected to continue growing as businesses adopt automation, artificial intelligence, and machine learning to enhance their operations and gain a competitive edge. Table of Contents: 1 Executive Summary2 Market Landscape3 Market Sizing4 Historic Market Size5 Five Forces Analysis6 Market Segmentation Component Geography 7 Customer Landscape8 Geographic Landscape9 Drivers, Challenges, and Trends10 Company Landscape11 Company Analysis12 Appendix About Technavio Technavio is a leading global technology research and advisory company. Their research and analysis focuses on emerging market trends and provides actionable insights to help businesses identify market opportunities and develop effective strategies to optimize their market positions. With over 500 specialized analysts, Technavio's report library consists of more than 17,000 reports and counting, covering 800 technologies, spanning across 50 countries. Their client base consists of enterprises of all sizes, including more than 100 Fortune 500 companies. This growing client base relies on Technavio's comprehensive coverage, extensive research, and actionable market insights to identify opportunities in existing and potential markets and assess their competitive positions within changing market scenarios. Contacts Technavio ResearchJesse MaidaMedia & Marketing ExecutiveUS: +1 844 364 1100UK: +44 203 893 3200Email: media@ View original content to download multimedia: SOURCE Technavio Sign in to access your portfolio
