Data Center Development is a Reality Check
As the digital world rapidly evolves, data centres have become the backbone of our modern infrastructure, powering everything from streaming services to artificial intelligence. However, the increasing demand for these services, particularly AI, is placing unprecedented strain on resources like power and water. Malaysia, with its strategic foresight, has already made strides in becoming a data centre hub, but the real challenge lies ahead. As we face the AI boom, are we ready to sustain this momentum? The answer depends on our ability to plan, invest, and innovate for the future.
Market Longevity: How A Country Becomes A Datacenter Hub
Malaysia is rapidly emerging as a leading datacenter hub in Southeast Asia, projected to soon surpass Singapore in capacity. To sustain this growth, Malaysia should develop its own subsea cable routes and landing stations for direct international connectivity, and broaden datacenter development beyond Johor to regions like Kedah, leveraging their renewable energy potential and proximity to existing infrastructure in Southern Thailand. Learning from the proactive policies and strategic initiatives of leading markets such as Singapore, Hong Kong, and Japan will be crucial to ensuring long-term success and sustainable growth.
Changes In The Way The Datacenter Industry Thinks
The datacenter industry is undergoing a transformative phase driven by the surge in demand for capacity within the digital economy, propelled by the advent of generative AI and other technological advancements. As Malaysia emerges as a significant hub, the country is poised to face challenges in accommodating this growth while adhering to ESG regulations. With the number of datacenters expected to double, Malaysia must avoid overstretching its resources, unlike Singapore. By studying larger markets like the US and China, Malaysia can learn to manage resources effectively, innovate in site selection by opting for remote locations, and develop self-sufficient power solutions, ensuring sustainable growth in its digital infrastructure.
Shifting Sands: Undersea Cable Networks
The world is more connected today than it has ever been at any point in human history, and one of the unsung heroes behind this a vast sprawling web of undersea cables powering instant global communications. In this digital era where data is viewed as the “new oil”, these networks have become indispensable spanking about 1.4 million kilometers and transmitting over 95% of global data traffic.
Conserving Water: What Datacenters Can Do To Quench The Thirst
With the average datacenter uses 1 million to 5 million gallons of water a day (Washington Post, 2024), and Malaysia fast becoming the new datacenter hub for the region, with reports showing that the number of datacenters is expected to double from the existing 45 sites nationwide, with an additional 44 sites in the pipeline. For the datacenter industry, the message is clear, we need to look at reducing the impact of newer builds and begin to standardize the way we do so, but this needs to be done soon, or there maybe justifiable resistance to further builds later down the road.
The Realities Of Green Energy In The Datacenter Industry
Balancing datacenter expansion with the impact it will have on the climate, requires a balanced and nuanced approach. Generative AI is a necessity for the world we live in today, this is an immutable fact. Datacenters are required to enable generative AI, so we cannot simply stop building them or the world as we know it would grind to a halt.
Planning For An Evolving Landscape
With more datcenters causing concern for resources in Johor, the discussion must move towards a national strategy for capitalising on the investment opportunities for Malaysia in the industry.
Lessons Learnt In Datacenter Development For Malaysia?
As datacenter development surges in Johor, the need for strategic expansion to other regions in Malaysia becomes imperative to avoid overburdening the state’s resources. With a rise from 10 datacenters in 2021 to 51 in 2024, Johor faces significant strains on water and power supplies, highlighting the importance of a balanced and thoughtful approach to further development across the country.
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Striking Out: Capitalising On International Opportunities
The recent sale of 35 acres in i-TechValley for RM210.3 million to Digital Hyperspace Malaysia Sdn Bhd highlights Malaysia’s growing appeal in the APAC datacenter industry. With investment growth of 19.1% in the past year and a surge in datacenters from 10 in 2021 to 51 in 2024, Malaysia is becoming a key destination for datacenter development. Strategic investments in subsea cable routes and green datacenter standards could further solidify Malaysia’s position as a prime regional hub, attracting skilled jobs and boosting the economy.