The buildout of AI infrastructure in the Asia-Pacific is in high gear. Masayoshi Son and Mukesh Ambani are among the region’s wealthiest taking the lead.
Nestled in the foothills of Mount Pulai in Malaysia’s southern state of Johor and surrounded by palm oil plantations, four windowless, single-story buildings emit a steady drone 24/7. This comes from powerful supercomputers simultaneously running cloud computing and artificial intelligence applications, some using Nvidia’s most advanced GB200 chips. Capable of processing 1.8 terabytes of information per second, these GPUs are housed in a 20-megawatt (MW) facility within a 664-hectare data center park operated by YTL Power International, the utility unit of Malaysian tycoon Francis Yeoh’s YTL conglomerate. Inside the building are three-meter tall fans blowing cold air onto rows of server racks interconnected by kilometers of cables.
Two years ago, the American chip giant announced a $4.3 billion plan to develop AI infrastructure with YTL in Johor, of which $2.4 billion has already been spent building 200MW of data center capacity. The high profile collaboration vindicated YTL’s 2021 bet on the business. “People said we were crazy to think we could build the equivalent of Singapore’s total data center capacity in Johor,” recalls Yeoh Keong Hann, YTL Power’s executive director and the elder Yeoh’s nephew, in a video call from the group’s headquarters in Kuala Lumpur.
YTL’s timing was fortuitous, dovetailing with Malaysia’s ambitions to become a digital hub and Johor, blessed with plentiful land, electricity and water—key essentials for data centers—emerged as a hotspot. At the Sedenak Tech Park, 28 kilometers northwest of the YTL complex, Malaysian billionaire Robert Kuok’s K2 Strategic—helmed by his 42-year old grandson Kuok Meng Wei—aims to quadruple its data center capacity in Malaysia to 240MW in a few years.
“Malaysia aims to become a leading AI nation by 2030, leveraging AI to boost productivity, enhance public services and build a sustainable, inclusive and ethical digital economy,” Prime Minister Anwar Ibrahim said after a meeting with Nvidia founder and CEO Jensen Huang and YTL Power managing director Yeoh Seok Hong at the APEC Summit in South Korea last month. The country’s aspiration to overtake neighboring Singapore in data center capacity, which analysts forecast could be achieved over the next five years, is fueled by the AI boom that, in turn, has sparked a frenzied global buildout of AI infrastructure. While the U.S. has sprinted ahead, the Asia-Pacific region is catching up, according to Chicago-based real estate consultancy Cushman & Wakefield.
Global tech giants including Amazon, Google and Microsoft are pouring an estimated $240 billion in the next five years to expand their hyperscale footprint in the Asia-Pacific. This massive outlay, together with investments by regional players, is expected to more than double data center capacity across the region to more than 29 gigawatts (GW) by 2030 from 12GW in 2024, according to Cushman & Wakefield. By the end of the decade, the region could well be the world’s second-largest data center market, next only to the 32GW capacity that will be created in the Americas, it added.
Data Center Race
Drawn by the potential, several of Asia’s leading tycoons and conglomerates have jumped into the race. In India, Gautam Adani’s flagship Adani Enterprises, together with Alphabet’s Google, is investing $15 billion over the next five years to develop what it claims will be the country’s largest data center campus in the southeastern state of Andhra Pradesh. No less ambitious is the plan by India’s richest person Mukesh Ambani’s Reliance Industries to build a 1GW AI data center in the western Indian state of Gujarat as it develops AI platforms with Google and Facebook parent Meta Platforms. “We are making all of our businesses AI-native, positioning them for hypergrowth,” Ambani said to shareholders in August.
High profile collaborations are being forged across the region. South Korea was in the spotlight earlier this year when chips billionaire Chey Tae-won’s SK Group teamed up with Amazon Web Services to invest $5 billion to build a data center in Ulsan, an automotive industry hub south of Seoul. Kim Beom-Su’s messaging app Kakao, which forged a partnership with ChatGPT owner OpenAI, is building a $438 million facility northeast of the capital. Jay Y. Lee’s semiconductor giant Samsung Electronics is developing memory chips for OpenAI and jointly building data centers in the country. In Taiwan, Terry Gou’s Foxconn and Nvidia are investing $1.4 billion to build a 100MW AI data center.
Digital Hubs
Tycoons in Thailand are also on overdrive as the nation scales up its digital efforts. In 2023, shopping mall giant Central Pattana, controlled by the wealthy Chirathivat clan, tied up with Warburg Pincus-backed Evolution Data Centers. Last year, energy-to-telecoms billionaire Sarath Ratanavadi’s Bangkok-listed Gulf Development announced a partnership with Google to build AI-powered cloud facilities. This June, billionaire Harald Link’s B.Grimm Power joined forces with Singapore-based Digital Edge (backed by New York-based private equity firm Stonepeak Partners) to invest $1 billion to build AI data centers across Thailand, starting with a 100MW center in the fast-growing Eastern Economic Corridor.
The investment boom has sent shares of listed data center companies in the region spiralling upward. This August, data center operator DCI Indonesia became the archipelago’s second-most valuable listed company with a market cap of over $37 billion. Its 2021 IPO had made cofounders Otto Toto Sugiri, Marina Budiman and Han Arming Hanafia all billionaires. Sugiri says the company, which also counts tycoon Anthoni Salim as a shareholder, is upping the ante to keep pace with increasing demand from clients. DCI, which has 119MW of installed capacity across greater Jakarta, plans to boost that more than tenfold to 1.9GW, which includes a new hyperscale data center on Bintan Island, about an hour’s ferry ride from Singapore.
DCI’s success has drawn other Indonesian magnates into the fray: Tycoon Franky Widjaja’s property-to-palm-oil conglomerate Sinar Mas Group has partnered with Kuok’s K2 Strategic to develop data centers in greater Jakarta, situated close to those owned by Amazon Web Services and Microsoft. Mining magnate Theodore Rachmat’s Triputra Group, which teamed up with Singapore’s state-linked ST Telemedia Global Data Centres, has set up its first data center near the capital, with plans to construct several more across the country.
Green Gap
Some tycoons have upped the ante to tap opportunities beyond their own countries. In China, which has already built the biggest capacity in the region, the country’s tech billionaires are making big investments to grow their international presence. Jack Ma’s Alibaba is investing about $53 billion to expand its cloud computing infrastructure in Asia, Europe and South America, while Ma Huateng’s Tencent, which operates 55 data centers in 21 markets, is building new data centers in Japan and Indonesia. Japanese billionaire Masayoshi Son’s SoftBank, which is converting Sharp’s former LCD factory in Osaka into a 400MW data center for about $6 billion, signed up this year to invest in OpenAI’s $500 billion Stargate data center project in the U.S.
The sector’s potential has also sparked a flurry of dealmaking. In what was the region’s biggest-ever transaction so far, a Blackstone-led consortium last year paid $16 billion to acquire AirTrunk, an Australian data center firm. AirTrunk has over 1GW of installed capacity across 13 facilities that it expects to more than double by 2030, discloses its founder and CEO Robin Khuda by email.
The biggest concern over this fast-paced buildout of what are essentially resource-guzzling complexes is the strain on existing supplies of electricity and water. While some data center builders, such as YTL, are investing in solar energy to power them, and others look offshore, with Samsung Electronics recently partnering with OpenAI to develop floating data centers, a report by accounting firm PwC estimates that by 2030, green energy can at best meet less than a third of the increased electricity demand. “The gap is significant—and closing it is critical,” it says.
Some analysts also question whether the data center overdrive is leading to a bubble. But Jitesh Karlekar, director of Asia-Pacific data center research at property consultancy JLL, notes that with the quantum leap in AI applications in critical sectors like healthcare, education and defense, “the industry for now faces potential supply constraints.”
—With reporting from Ardian Wibisono