The global data center (DC) market has entered an era of rapid expansion, driven by the integration of Artificial Intelligence (AI), cloud computing, and widespread digital transformation. While established markets in the US, Europe, and parts of APAC continue to dominate, emerging regions such as Vietnam are showing immense promise. With supportive government policies, increasing investment in digital infrastructure, and strategic geographic advantages, Vietnam is positioning itself as a critical player in Southeast Asia’s burgeoning data center landscape.
Global Data Center Market Overview
The global data center market has witnessed unprecedented growth in recent years. According to Gartner, global IT spending on data centers is projected to grow by 34.7% year-over-year in 2024. This surge is primarily attributed to the increasing adoption of generative AI applications, which require high-performance computing capabilities and significant power resources. In 2023, the operational global DC capacity reached approximately 33 gigawatts (GW), with the Americas, APAC, and EMEA contributing 16.7%, 19.1%, and 13.6% CAGRs respectively from 2018 to 2023.
Generative AI has emerged as the pivotal force behind this growth, necessitating robust computing infrastructure to support high-power GPUs and advanced machine learning models. Forecasts from McKinsey predict a 22% CAGR in global data center capacity from 2023 to 2030, rising from 55 GW to an estimated 219 GW. Such robust growth underscores the importance of scalability, resource efficiency, and sustainability in data center operations.
Vietnam’s Growing Role in Southeast Asia
Current Landscape
Vietnam’s data center capacity is modest but growing rapidly. As of Q1 2024, Vietnam hosts 33 operational data centers with a combined capacity of 80 megawatts (MW). Hanoi and Ho Chi Minh City lead the charge, housing 15 and 16 data centers respectively. Domestic tech and telecom giants—including Viettel, VNPT, CMC Telecom, FPT Telecom, and VNG—dominate the market, collectively holding 70% of the market share.
Despite being a nascent market compared to regional peers like Malaysia and Singapore, Vietnam is attracting attention due to its ambitious digital transformation agenda. The Vietnamese government, in partnership with global tech leaders such as Nvidia and FPT, is investing in AI research hubs and data center infrastructure. These initiatives align with the country’s vision to become a leading technology hub in Southeast Asia.
Market Potential
Vietnam’s data center market value was estimated at $561 million in 2022 and is projected to grow at a CAGR of 10.7%, reaching $1.04 billion by 2028. Key factors driving this growth include:
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Policy Support:
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The Telecommunications Law (2023), effective July 2024, encourages foreign investment by relaxing ownership restrictions in the DC sector.
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Data localization regulations mandate the storage of critical information within Vietnam, further boosting domestic data center demand.
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Cost Advantages:
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Vietnam offers competitive costs for land and electricity compared to regional hubs like Singapore and Hong Kong.
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Its favorable investment climate includes tax incentives and streamlined regulatory processes for greenfield projects.
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Strategic Partnerships:
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Collaborations with tech giants like Nvidia and FPT underscore Vietnam’s commitment to advancing AI capabilities. Notable developments include the launch of FPT’s AI Factory and its partnership with Nvidia to enhance AI and cloud computing infrastructure.
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5G and Connectivity Expansion:
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Vietnam’s nationwide rollout of 5G and ongoing expansion of fiber-optic networks provide the backbone for next-generation digital services, making the country an attractive destination for hyperscale DC investments.
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Sustainability – A Crucial Pillar
As the global DC market grapples with resource limitations and environmental concerns, sustainability has become a critical focus. Vietnam is no exception. AI-driven data centers consume significantly more electricity than traditional cloud storage facilities, increasing the need for renewable energy and efficient cooling solutions.
Green Initiatives in Vietnam:
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Renewable Energy Integration: Companies are exploring solar and wind energy options to power their data centers sustainably.
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Advanced Cooling Technologies: Modular infrastructure designs and AI-driven energy management systems are being adopted to optimize resource use.
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Government Incentives: Policies encouraging green building certifications and sustainable practices are attracting eco-conscious investors.
Competitive Positioning in SEA-5
Vietnam is part of the SEA-5 (Malaysia, Indonesia, Thailand, the Philippines, and Vietnam), an emerging bloc of promising data center markets. While Malaysia currently leads the SEA-5 in capacity, Vietnam’s strategic initiatives position it as a viable alternative for hyperscale and colocation projects. Factors contributing to Vietnam’s competitive edge include:
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Geographic Advantage: Proximity to major economic hubs in Asia and robust undersea cable networks facilitate low-latency connectivity.
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Market Growth: The Vietnamese DC market’s CAGR of 10.7% positions it favorably within the SEA-5 group.
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Policy Backing: Recent legislative reforms prioritize foreign investment and data sovereignty, creating a business-friendly environment.
Challenges to Address
While Vietnam holds immense potential, it must navigate several challenges to solidify its position as a regional DC hub:
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Resource Constraints:
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High electricity consumption by AI-oriented data centers necessitates expanded renewable energy capacity.
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Limited availability of large tracts of land suitable for hyperscale projects poses a logistical challenge.
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Environmental Impact:
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Balancing growth with sustainability is essential to mitigate the environmental footprint of energy-intensive data centers.
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Skill Shortages:
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The rapid growth of the DC sector demands a skilled workforce. Investments in education and training will be critical.
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The Road Ahead
Vietnam’s data center market is on the cusp of a transformative phase. With robust government support, increasing international partnerships, and a focus on sustainability, the country is well-positioned to attract significant investments. However, addressing resource constraints and enhancing infrastructure resilience will be key to unlocking Vietnam’s full potential.
For global investors, Vietnam represents a compelling opportunity to shape the future of the data center industry in Southeast Asia. By capitalizing on the country’s favorable policies, cost advantages, and strategic location, stakeholders can establish a competitive foothold in this dynamic market.
Universal Smart Data Center Technology
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