Data center market is forecast to grow strongly 

Together with broadband telecommunications infrastructure and Internet of Things (IoT) infrastructure, cloud computing and data centers play important roles in shaping overall digital infrastructure in Vietnam, which is seen as one of the fastest-growing markets in ASEAN in the two fields. It has been estimated that Vietnam’s data center market value will reach $1.6 billion by 2030, posting a compound annual growth rate (CAGR) of nearly 11 per cent.

According to Research and Markets, meanwhile, Vietnam’s data center market will grow at a CAGR of 10.68 per cent in the 2022-2028 period, increasing from $561 million in 2022 to $1.037 billion by 2028.

Addressing the recent Data Center & Cloud Infrastructure Summit, Director of Viettel IDC Hoang Van Ngoc said the global data center market is expected to stand at around $321 billion this year after posting a CAGR of 7.3 per cent.

The Asia-Pacific region sees among the highest data center market growth rates, with a CAGR forecast at 18.9 per cent by 2028, reaching nearly $30 billion. Growth has been recorded in both primary and secondary markets, with a shift seen recently from the primary market (developed countries) to the secondary market (developing countries, including Vietnam). The data center markets in Vietnam, Philippines, Indonesia, Malaysia, and Thailand are all tipped to boom over the next few years.

Mr. Ngoc believes that Vietnam possesses many growth drivers to boost its data center market, such as an inexpensive labor market, an abundant information technology workforce, lower construction costs, and a legal framework and associated support in place to promote the government’s digital transformation program.

However, barriers hindering the development of the data center market in the country include its unstable submarine cable connections and concerns over power shortages.

Data centers and cloud computing speeding up

Some studies have forecast that Vietnam’s data center market will post double-digit growth of 11-12 per cent by 2030. Four domestic telecom giants - Viettel, VNPT, FPT, and CMC - currently account for 97 per cent of market share.

Growth in the cloud computing market, meanwhile, slowed in 2022 and 2023, as many businesses and organizations, after moving their services to the cloud, then looked to cut costs. However, this will only be a short-term measure, and the market is expected to recover by the fourth quarter of 2024 and grow once more in 2025 and 2026.

Vietnam’s cloud computing market has recorded the highest growth in Southeast Asia and ranked third in Asia. It is forecast to grow 19-20 per cent over the next five to ten years after reaching $768 million by 2025 and $1.2 billion by 2030.

Under the National Digital Transformation Program until 2025 with a vision to 2030, which contains three pillars - digital government, digital economy, and digital society - a strategy of “moving to the cloud” is considered paramount. This will provide major opportunities for Vietnam’s data center and cloud computing sectors to grow and create breakthrough movements.

Experts believe that sustainable technology is among the trends that will change the digital game during 2024, while research from Gartner also shows that sustainable technology is one of the top 10 strategic technology trends in 2024.

According to forecasts from CB Insight on different types of data centers, the world has begun to head towards “tomorrow” by choosing locations in cooler climates with lower energy consumption and with priority given to using renewable technology and energy sources, while applying AI in operations together with the use of advanced cooling technologies.

Google and Facebook, for example, have built large data centers in Iceland and Microsoft has started to operate an underwater data center. These are breakthrough measures as the world heads towards a “future” of building offshore data centers that operate based on renewable energy.

Development trends

In Vietnam, data centers remain traditional in architecture and design, with normal cooling solutions and using electricity from Electricity of Vietnam (EVN) without the option of accessing renewable energy.

In order to fulfill goals and the net-zero emissions commitment it made at COP 26, Vietnam’s data center infrastructure needs to head towards “tomorrow” within the next three to five years and accompany the world to the “future” post-2030.

Moves are afoot. A representative from Viettel IDC said its new data center will use AI in its operations, apply liquid cooling technology, and access renewable energy once a clear legal framework is in place. Business Manager of Climaveneta Vietnam, Khuong Nguyen, said liquid cooling will become among the popular technologies applied in the near future. However, Head of the Data Development Office at Nokia, Byung Ki Lee, said that while the data center market is attractive, the field still faces pressure in cutting carbon emissions, which has now become a key requirement.

Vietnam has issued many legal regulations in recent times, such as the Law on Cyber Security, the Law on Telecommunications, and Decree No. 13 on Personal Data Protection, which emphasize the importance of data and require that organizations and businesses store personal data inside Vietnam’s borders. Experts believe this strategy will help promote the development of the country’s data center and cloud computing industries.

The information and communications infrastructure plan to 2030 has a sharp focus on infrastructure investment, including submarine cables and 5G networks. Many businesses, including FPT, Viettel, and VNPT, have taken part in submarine cable projects that are expected to ensure stable connections by next year.

The development of a 5G network will also help grow new technology services such as AI, Virtual Reality (VR), and Augmented Reality (AR), thus boosting demand for data use and storage as well as enhancing the development of digital infrastructure services such as data centers and cloud computing.

The boom in AI will encourage the development of infrastructure investment services, with a major impact on data centers and cloud computing. According to analysts from Cushman & Wakefield, AI is likely to change the game and will reshape the data center market in 2024 with its rapid growth.

Data centers and cloud computing both count among the most important elements of digital infrastructure, and Vietnam’s data center market continues to attract substantial investment from both domestic and foreign businesses. Local telecom giants such as VNPT, Viettel, CMC, and FPT have all recently focused on the construction and development of modern and large data centers that provide services of international standard.

Analysts from the Ministry of Information and Communications have said that investment in data centers is a new effort by telecom providers, opening up development space and meeting requirements for the digital government, the digital economy, and the digital society to develop.

There remains ample space for the further growth of the data center market in Vietnam, as there are only 29 in the country at present, or just 1 per cent of the total number globally.

According to the Vietnam Cloud Computing and Data Center Club, businesses in Vietnam have mastered technology and bolstered their competitiveness, and stand ready to meet the necessary requirements under Vietnam’s roadmap to become an important digital center in ASEAN.

Viettel currently operates 13 data centers nationwide, and plans to build mega centers in Ho Chi Minh City and Hanoi by 2030 with a total capacity of 450 MW, or a four to five-fold increase compared to current capacity.

It also plans to promote international cooperation and build large data centers to encourage major businesses such as Amazon and Microsoft to establish their data centers in Vietnam, according to Chairman and Director General Tao Duc Thang.

In late 2023, meanwhile, VNPT officially opened an Internet Data Center at the Hoa Lac Hi-Tech Park in Hanoi that can accommodate 2,000 racks. The group has eight other data centers, in Hanoi, Ho Chi Minh City, and Da Nang, all of which meet strict domestic and international requirements.

VNPT Director General Huynh Quang Liem said the group has sought cooperation with partners and investors to build regional and international data centers using green and sustainable technologies.

Becoming a regional data center

The Information and Communications Infrastructure Development Plan in 2021-2030 with a vision to 2050, which was approved by the Prime Minister early this year, emphasizes that information and communications infrastructure assists national digital transformation, opening up new space for socio-economic development.

The plan identifies data as a resource to promote socio-economic development, creating new growth drivers and improving national competitiveness. It prioritizes general resources to develop cloud computing, turning Vietnam into a cloud computing and data center of the region.

Large-scale data centers are to be established and developed under green standards and with energy planning in mind. The plan also ensures that data centers are linked to interconnected data and backup capacity, helping promote the big data industry.

The use of cloud computing developed by Vietnamese businesses is also prioritized and encouraged, to manage resources and data flexibly, stably, and effectively in line with regulations on cyber security.