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,Hyperscale data centre buzz

DESPITE the dour economic sentiment in the country, one area that seems to promise significant growth is hyperscale data centres (HDCs). These are vast data centres being built using thousands of computer servers and which consume copious amounts of electricity. They cater to the ever growing digitalisation in all aspects of our lives, boosted by the Covid-19 pandemic.

Global giants in cloud computing and hosting are increasingly looking at Malaysia as a place to have their data centres. These include tech giants such as Amazon, Microsoft, Google and Tencent. They also include lesser known but equally big tech firms who have specialised in data centres such as GDS, Equinix and 21Vianet.

It is interesting to note that many of these global tech players already have their data centres in Singapore.

Singapore’s political stability and reliable infrastructure had attracted global tech giants to build HDCs on the island republic.

However, about two years ago, Singapore began limiting approvals for HDCs there. This is because HDCs consume large amounts of electricity and water. Land scarcity is said to be another reason.CLICK TO ENLARGE

This in turn has made Malaysia a choice location.

Dr James Tee, executive director, G3 Global Bhd, is one official in the thick of such negotiations.

“Malaysia now has a one-in-a-lifetime opportunity. The global market size of colocation data centres is estimated to reach US$92.4bil (RM387.2bil) in 2025. Asia-Pacific alone will account for 50% of the global market by revenue and 40% by MW in 2025 globally,” he says.

MW or megawatts in terms of electricity consumption is used to describe the size of data centres. HDCs are being loosely defined as data centres that consume 20MW or more.

Adds Tee: “Malaysia is in an opportune position to be a part of this growth. Reports indicate that Malaysia can expect a compounded annual growth rate (CAGR) for HDCs of 13% between 2019 to 2025. This is supported by the fact that our domestic data centre industry revenue has been growing at a CAGR of 22% from 2011 to 2020.”

Research outfit Arizton Advisory reckons that Malaysia’s data centre market size will reach revenues of a massive US$1.4bil (RM5.8bil) by 2026.

The state of Johor is becoming one hotspot. Microsoft and GDS are among those building new HDCs there. (See Table 1)An industry player recently told StarBizWeek that 10 global players are now looking to set up HDCs in Johor.

Johor appeals to some large tech players already in Singapore because of the availability of high data speed connections between Johor and Singapore. Lower cost is another obvious reason.

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