MCB Insights

Vietnam's Data Center Industry:
Top 10 Emerging Global Data Center markets, 2023

In the dynamic arena of data infrastructure, Asia is emerging as a pivotal player, witnessing a remarkable surge in investments and technological advancements. Among the rising stars in this digital transformation landscape is Vietnam, where the cloud and data center industry are experiencing rapid growth, propelled by various factors including digitalization efforts, the advent of 5G, and stringent data localization laws

In brief

  • Vietnam is top 10 Emerging Global Data Center markets, 2023 by Savills APAC report.

  • In 2023, Vietnam has 28 data centres with a total capacity of 45 MW with 44 service providers.

  • The Government aims for Viet Nam to become a key digital hub, and the data centre market is forecast to grow to US$1.04 billion by 2028, up from US$561 million in 2022 and representing a CAGR of 10.7%

midst the surging global demand for data infrastructure, there's a notable shift towards emerging Asian markets, spurred by government-led digitalization efforts. Countries like Indonesia, Malaysia, India, and Vietnam are witnessing significant investments in digital infrastructure, laying the foundation for a flourishing data center ecosystem.

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Source: Savills Industrial Whitepaper, 2023

  • Vietnam's cloud and data center industry are experiencing rapid growth, buoyed by digitalization efforts and local data regulations. With a young and tech-savvy population, Vietnam is attracting foreign operators aiming to capitalize on its burgeoning market.

    While the data center market expands rapidly, challenges like data privacy, cybersecurity, and sustainable resource consumption need addressing. Collaboration between governments and industry stakeholders is crucial to tackle these challenges and seize the opportunities presented by cloud, colocation, and edge computing. With effective strategies in place, Asia's data center markets are set for exponential growth, fostering innovation and shaping the digital landscape for the foreseeable future.

  • Indonesia, with 200 million internet users out of its 275 million population, anticipates its online retail market to reach US$95 billion by 2025. The country is evolving into a tech hub, evident from the success of indigenous unicorns like GoTo. Indonesia's data centers are also positioned to cater to regional markets.

  • Malaysia has made substantial investments in digital infrastructure, including underwater cable links, enhanced domestic connectivity, and the rollout of 5G. Foreign companies, such as NEXTDC from Australia, are showing interest, evident from the construction of Malaysia's largest Tier IV facility with a capacity of 65MW.

  • India, with its massive population and increasing prosperity, is driving the demand for data center expansion. Research indicates significant capacity additions, with government initiatives like Digital India and emphasis on data localization fueling demand for data centers.

>> Vietnam’s Data Center Industry

Vietnam's cloud and data center industry ranks among the world's fastest-growing sectors.

This growth is propelled by the digitalization of local small and medium-sized enterprises (SMEs), a youthful and digitally adept populace, the advent of 5G technology, the imperative for self-reliance in digital infrastructure, and regulations mandating data localization.

The majority of players in Vietnam's data center sector are domestic telecommunications firms such as Viettel IDC, NTT Global Data Centers, FTP Telecom, CMC Telecom, HTC Telecom International (ECODC), VNPT, and VNTT. Additionally, IT infrastructure providers like HP, Dell, Cisco Systems, Fujitsu, Hitachi, Huawei, IBM, Lenovo, NetApp, NEC Corp, and Oracle are active in the market.

Under the Digital Transformation Program, the government targets migrating 50% of businesses to digital platforms by 2025. Vietnam's robust 5G infrastructure facilitates the deployment of edge data centers, offering last-mile connectivity and low-latency services. Moreover, in February 2022, the Ministry of Information and Communication announced plans for researching and developing 6G technology to cater to rapidly evolving technology sectors.

Currently, Vietnam is serviced by five operational submarine cables linking it to Asia-Pacific (APAC), Europe, the Middle East, and the United States. Additionally, two forthcoming cables, the Asia Direct Cable (ADC) and Southeast Asia-Japan Cable 2 (SJC2), are expected to bolster connectivity between 2023 and 2024.

>> Vietnam Data Center Market Analysis

The tier 3 sector in the Vietnamese data center market reached an IT load capacity of 119.56 MW in 2022. It is expected to register a CAGR of 2.23% to reach 139.56 MW by 2029. There is an increased investment in data center infrastructure and technological advancements. It is expected to create lucrative opportunities for market growth in 2029.

>> Competitive Landscape

The Vietnam Data Center Market is fragmented, with the top five companies occupying 29.97%. The major players in this market are CMC Telecom, DTS Communication, Telehouse (KDDI Corporation), VNG Cloud and VNPT (sorted alphabetically).

>> The AI Surge : Catalyzing Data Center Expansion

The surge in artificial intelligence (AI) applications is propelling an unprecedented demand for data processing and storage, necessitating advanced data center infrastructures capable of handling complex computations and vast data volumes. This acceleration underscores the indispensable role of data centers in facilitating technological progress and shaping the digital landscape across various industries. As the AI boom continues to reshape business operations and consumer experiences, the reliance on data centers as the backbone of these advancements becomes increasingly evident.

To meet the burgeoning demand

125 ZB

New Demand for storage capacity

$800 BN

Cloud Service Market Revenue by 2025

24% CAGR

Data Center market projected to grow at a CAGR of 24% between 2021 and 2026

“One initiative at the forefront of redefining data center operations is the DeTech initiative by MCB Ventures DAO. This initiative focuses on empowering innovation through decentralized technologies, emphasizing autonomy, security, and efficiency in AI and data center operations to capture the industry opportunity”

Leo Chris Lu, MCB Co-Founder and CEO

DeTECH

How MCB takes initiative

The AI surge is propelling a significant expansion in data center infrastructure, driven by the increasing demand for processing power and storage capacity. Initiatives like the DeTech initiative by MCB Ventures DAO are leading the charge in revolutionizing AI and data center operations through decentralized technologies. By integrating blockchain technology and embracing decentralization, these initiatives are not only enhancing the security and efficiency of AI systems and data centers but also democratizing access to these transformative technologies, paving the way for a more equitable and innovative digital future.