The global hyperscale data center market was valued at approximately $59 billion in 2020, and various research projections suggest it could cross over $500 billion by 2030, growing at a CAGR of 20% from 2021 to 2030. This growth is propelled by the increasing demand for data processing, storage, and management capabilities due to cloud services, IoT, AI, and big data analytics.
Major players like Amazon, Microsoft, Google, IBM, and Apple dominate the hyperscale market. These companies not only operate their own data centers but also influence the market through their cloud computing services like AWS, Azure, and Google Cloud. Other significant providers include Alibaba, Oracle, and Tencent, each with substantial market shares particularly in their respective regions .
There’s an ongoing trend where hyperscalers are not only building their own facilities but also increasingly relying on third-party developers for speed-to-market advantages, indicating a hybrid approach in data center development strategies. This is leading to increasing investment in this space.
The Canada Pension Plan Investment Board (CPP Investments) has announced a significant new venture with Pacific Asset Management Company (Pacific AMC) to develop carrier-neutral hyperscale data centres in South Korea.
CPP Investments has committed KRW 276 billion (C$285 million) to the initial seed project of this joint venture, which totals KRW 1 trillion (C$1 billion).
The venture aims to capitalize on the increasing demand for data centres in the Asia Pacific region, driven by the expansion of cloud computing and the adoption of artificial intelligence. South Korea’s emergence as a digital technology hub further underscores the strategic importance of this investment.
This is the second investment. Their first venture led to the development of the Jukjeon Data Centre in the eastern part of the Seoul metropolitan area.
This move is part of CPP Investments’ broader strategy to invest in digital infrastructure across the Asia Pacific, with existing projects in places like Australia, Hong Kong, Japan, Malaysia, Singapore, and now expanding further in South Korea.
There’s a significant shift towards AI-optimized infrastructure, with hyperscale data centers being designed or retrofitted to handle the computational demands of AI, particularly generative AI, which requires high-performance computing environments . While hyperscale data centers are central to large-scale cloud operations, there’s an increasing focus on edge computing to reduce latency and improve performance for applications requiring real-time data processing like IoT and online gaming . The industry is moving towards more sustainable practices, with hyperscalers committing to renewable energy sources for their operations, and designing facilities with energy efficiency in mind, like Google’s low PUE (Power Usage Effectiveness) data centers . The expansion into emerging markets for data centers is notable, with regions like India, Latin America, and Asia Pacific showing strong growth potential due to digital transformation initiatives and increasing internet usage .
Advanced cooling technologies, including liquid cooling systems, are being adopted to manage the heat generated by dense computing setups like those needed for AI workloads .
High initial investment costs and the environmental impact of energy consumption pose significant challenges, pushing for innovations in energy efficiency and design. The need for scalable, efficient data management, the rise of cloud computing, and the increasing data volume from digital transformation initiatives are key drivers. The integration of hyperscale data centers with AI and machine learning applications, alongside the expansion into new markets, presents substantial opportunities for growth .
As of 2024, India’s data centre industry has been witnessing robust expansion, with the market size expected to reach around $5 billion by the year’s end, reflecting a compound annual growth rate (CAGR) of over 20% in recent years. Regulations requiring data to be stored within India increase the need for domestic data centre capacity, benefiting local investments.
Large Corporations like Reliance, Sify, AdaniConnex, Yotta, AWS have announced significant Data Centre investments in this space. AWS plans to invest $12.7 billion to expand its data centres in India.
Kotak Alternate Assets aims to invest $800 million in the development of 5-7 large data centres across key Indian cities.
CtrlS Datacenters Ltd: Plans to expand with over 600 MW of capacity by 2029, with significant projects in Navi Mumbai, Chennai, and exploring Tier 2 cities. Sify Technologies: Has raised funds for new data centres, aiming to add 350 MW to its capacity through projects in Chennai, Mumbai, Noida, and Bengaluru. ST Telemedia Global Data Centres: Investing around Rs 2,000 crore to develop new data centres in Pune, aiming for a significant IT load capacity. Mumbai remains a prime region for data centres, expected to demand up to 800 MW, highlighting its position as a data hub within India.
The Indian government has been proactive with Data Centre Policies which seeks to streamline regulations and incentivize investment. The ‘Digital India’ campaign and data localization norms also play a significant role in pushing for local data centre development. Expansion in India’s data centre sector not only caters to local market needs but also positions India as a potential global data hub, given its strategic geographic location, lower operational costs, and the burgeoning tech industry.
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