Demand for data centers has been booming in recent years, with global data centre investment almost doubling and expected to reach $432bn by 2025, according to data from Frost & Sullivan.
Asia is at the forefront of this rapid growth, with demand in the region increasing due to various factors, such as rapid digital transformation across economies, rising internet penetration, and growing adoption of cloud computing.
At the same time, several industries have become more data-intensive and require robust data infrastructure that can handle the storage, processing, and analysis of this data. Based on their rate of digital adoption and projected growth, here are five industries we think would benefit the most from Asia’s rapid expansion in data centers.
Financial Services
The financial sector in Asia is rapidly expanding. There is a growing demand for data center to handle the increasing volumes of financial transactions and meet stringent data security and regulatory requirements. According to a new Google-led study, Southeast Asia’s digital payments market alone is expected to reach $2 trillion in transaction value by 2030. With the industry’s need for high-performance computing capabilities, robust storage systems, and secure network connectivity, data center enable financial institutions to deliver efficient and secure services.
Cloud and IT Services
Cloud adoption is a key driver for much of the digital transformation that is taking place in the region, and data centres play a critical role in storing and managing the vast amounts of data located in the cloud. Data center also serve as connectivity hubs, enabling cloud service providers to establish high-speed and reliable network connections. Cloud spending is expected to reach $200 billion in Asia Pacific by 2024, with investment into cloud growing at a compound annual growth rate (CAGR) of over 20% since 2018.
E-commerce and Retail
Asia has witnessed a significant surge in e-commerce and online retail, driven by a growing middle class and increasing internet penetration. Southeast Asia’s e-commerce market is projected to triple by 2026, reaching approximately $230 billion in gross merchandise volume. Data centers are crucial for e-commerce companies to handle online transactions, manage inventory and support their digital platforms, among other things.
Healthcare and Life Sciences
The healthcare and life sciences sectors generate significant amounts of data through patient records, medical imaging, clinical trials, and wearables. According to McKinsey, digital health in Asia could be worth up to $100 billion by 2025, up from $37 billion in 2020.
The pandemic accelerated the industry’s digitalization journey, and telemedicine has become more accepted and widely used than before. Furthermore, the adoption of electronic health records, advancements in medical technology, and the growth of precision medicine have also contributed to the data intensity in this industry.
Manufacturing and Industrial
Asia’s manufacturing and industrial sector has become increasingly data-intensive with rising demand for remote operations, the deployment of 5G, and digital transformation initiatives. Data generated from sensors, Internet of Things (IoT) devices, and machine-to-machine communication needs to be quickly analyzed to enable real-time monitoring, predictive maintenance, and optimizing production processes. Leading manufacturers now realise significant value from digitalization, and IDC expects Asia Pacific spending on IoT to reach $436 billion by 2026.
Bonus – Artificial Intelligence driving data centre demand across industries
Still in its nascent state of growth, there is a high level of interest for infrastructure driven from AI that will likely be the next big driver of data centre demand across the region. According to a recent Bloomberg Intelligence (BI) report, the generative AI market is set to experience an unprecedented surge, projected to reach $1.3 trillion within the next decade, up from $40 billion in 2022.
The initial growth of the sector is expected to stem from the expansion of training infrastructure, eventually transitioning towards inference devices for large language models (LLMs), digital advertising, specialized software, and services. The report also highlights that escalating demand for generative AI solutions could contribute an additional $280 billion in software revenue, primarily propelled by the deployment of specialised assistants, innovative infrastructure products, and coding acceleration copilots.
Artificial intelligence (AI) is set to revolutionize business operations across diverse industries, including healthcare, finance, transportation, and retail, redefining the landscape of each. For example:
- AI can enhance risk assessment, fraud detection, and personalized customer service in the financial sector.
- Cloud services stand to benefit from AI’s ability to optimize storage, improve security, and streamline data management.
- The e-commerce industry can leverage AI for personalized shopping experiences, efficient inventory management, and predictive analytics for consumer behavior.
- AI shows promise in disease prediction, patient care, and drug discovery in healthcare.
- Manufacturing will see enhancements in quality control and supply chain optimization with AI.
This increased integration of AI across industries will invariably lead to a surge in data generation, necessitating robust data centre infrastructure. Data centre demand in Asia Pacific is already on the rise, and AI will likely fuel further growth.
All of these critical industries leverage data in many ways, such as to improve operations, enhance customer experience, and gain competitive advantage. As technological advances continue, these sectors will require sophisticated and scalable data infrastructure to support their ever-growing needs. Thus, the future of data centres in Asia looks promising, underpinned by the region’s embrace of AI and the subsequent data boom.
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