"Malaysia is emerging as a data center powerhouse amid booming demand from AI"

From CNBC, June 16:

• Malaysia is attracting billions in investments for data centers amid increased demand for cloud and AI services.
• According to DC Byte’s 2024 Global Data Centre Index, the city of Johor Bahru is the fastest growing data center market in Southeast Asia.
• If all of Malaysia’s planned data center capacity comes on line, it will become one of the largest hubs in Asia.

Malaysia is emerging as a data center powerhouse in Southeast Asia and the continent more broadly as demand surges for cloud computing and artificial intelligence.

Over the past few years, the country has attracted billions of dollars in data center investments, including from tech giants like Google, Nvidia and Microsoft. 

Much of the investments have been in the small city of Johor Bahru, located on the border with Singapore, according to James Murphy, APAC managing director at data center intelligence company DC Byte.

“It looks like in the space of a couple of years, [Johor Bahru] alone will overtake Singapore to become the largest market in Southeast Asia from a base of essentially zero just two years ago,” he said. 

Johor Bahru was named as the fastest growing market within Southeast Asia in DC Byte’s 2024 Global Data Centre Index. 

The report said the city has 1.6 gigawatts of total data center supply, including projects under construction, committed to or in the early stages of planning. Data center capacity is typically measured by the amount of electricity it consumes.

If all planned capacity comes online across Asia, Malaysia will only be surpassed by the larger countries of Japan and India. Until then, Japan followed by Singapore currently lead the region in terms of live data center capacity. 

The index did not provide a detailed breakdown of data center capacity in China.

Shifting demand
The vast majority of data center infrastructure and storage investments have traditionally gone to the established markets of Japan and Singapore, as well as Hong Kong.

However, the global pandemic expedited the world’s digital transformation and cloud adoption, leading to surges of demand for cloud providers in emerging markets like Malaysia and India, according to a report from global data center provider EdgeConneX.

“Increased demand for video streaming, data storage, and anything done over the internet or on a phone, essentially means that there’s going to be more need for data centers,” said Murphy. 

Booming demand for AI services also requires specialized data centers to house the large amounts of data and computational power required to train and deploy AI models.

While many of these AI data centers will be built in established markets such as Japan, Murphy said emerging markets will also attract investments due to favorable characteristics. 

AI data centers require a lot of space, energy and water for cooling. Therefore, emerging markets such as Malaysia — where energy and land are cheap — provide advantages over smaller city-states like Hong Kong and Singapore, where such resources are limited.

Spillover from Singapore....

....MUCH MORE