New Malaysian Hyperscale to Mop Up Singaporean Data Center Spillover

• New 100 MW Hyperscale Data Centre planned by G3 Global Bhd
• Current rise in cloud computing demand affected by Singapore’s moratorium

"If you look at the (data centre) market right now, there is no clear leader at the hyperscale level," says Dr James Tee (pix, above) executive director in charge of AI and IoT at the Malaysian based, G3 Global Bhd. The insinuation is that G3 Global, along with its associate company Green Packet Bhd, will be the ones to fill that gap.

The planned 100 megawatt (MW) Hyperscale Data Centre is intended to be the cornerstone of the company's AI City, which is positioned as an "AI-powered Technopolis". It is envisioned to comprise educational, residential, industrial, transportation and infrastructure facilities equipped with the latest AI solutions.

Representing an investment of US$1 billion (RM4.11 billion) over the next five years, the project will be a collaboration between G3 Global, China’s SenseTime Group Ltd and China Harbour Engineering Company Ltd (CHEC).

And the next milestone to be unveiled in 2021 will be the first phase of the Hyperscale Data Centre comprising three 10MW facilities. This will support the newly-inked agreement between its largest shareholder, Green Packet,  with Tencent Cloud in a 10-year deal to offer cloud computing solutions in Malaysia.

Tee is forward about their ambition. "When you look at it last year Tencent had the highest growth (130%) among the top five cloud service providers in the world," he says.

High growth in region

It is unlikely that G3 Global will be the only hyperscale player in this region in the coming years, given the demand by giant cloud provider players such as Tencent, Google, AWS and Alibaba. "The Southeast Asia market has a high potential for converged and hyperconverged infrastructure as they offer scalability and flexibility to operations," says Tee.

According to market research by them, the data centre market in Southeast Asia is poised to grow by USD11.63 billion with 14% CAGR during 2020-2024. Additionally, according to a report by Structure Research in 2019, co-location data centre capacity is expected to grow by 12% CAGR between 2019 and 2024 (from 59MW to 104MW).

In sharp contrast, Singapore is expected to grow only by 6% CAGR to 542MW in 2024, despite its current position as the data centre hub for Southeast Asia (with 64% of the total supply in 2019 representing 410MW). This is due to a moratorium on constructing new data centres on the island nation since 2019.

"This is understood to buy time for the government to reassess the market, as well as allow the industry to come up with new and more energy efficient power solutions," said a report by Eco-Business, which also noted that 7% of the Singapore's energy usage is from data centres. Meanwhile the country just last month announced plans to issue an RFP to import 100MW of electricity from Malaysia, representing 1.5 percent of Singapore’s peak energy demand.

Another issue Singapore has to contend with is land. Data centres in Singapore are already being housed in buildings up to four storeys high, which is unusual in itself, but the recent news that Keppel is studying the feasibility of developing a “floating data centre park” crystallises the problem.

Singapore spill over

Nevertheless, demand grows unabated. "While there is a moratorium through 2021 on building new data centres, we have observed continued demand for data centres in the Singapore market and other Southeast Asian countries," said Clement Goh, STT GDC Chief Executive Officer, Southeast Asia.

"Indonesia, Thailand, Malaysia, Philippines and Vietnam are all attractive propositions to set up data centres for a variety of reasons: Large domestic consumption and accelerating level of industrialisation, in addition to government incentives to set up data centres in-country, increased scrutiny around data sovereignty and the availability of land."

All this leads to an opportunity. “We believe that there's a spill over effect coming from Singapore,” summarised Tee. He likens it to the pattern in and around Beijing, where land and power constraints have led to a rise in data centre hubs in neighbouring Langfang and Zhangjiakou. “(There are) Singapore players that will help us to tap into the spill over from Singapore, but they could also potentially be regional players further up north, that will allow us to tap into the North Asian market.”

He is already seeing evidence first-hand of this, having been involved in discussions with various potential domestic and regional partners, including one already responsible for hundreds of data centres in the region, lending credence of the predicted double-digit growth of the market.

"You will continue to see this trend over the next five years. There are many companies with billion dollar funds that will want to collect data centre assets,” said Tee. “Data centres are a very hot asset now.”

Scaling up to the Hyperscale

The 10-year agreement with Tencent represents the jumpstart G3 Global needs. The Hyperscale Data Centre will be built in stages, starting with a 30MW initial phase, but eventually rolling out to something bigger. "G3 Global has the opportunity to take a leading role in the hyperscale data centre space," says Tee.

The scale up to 100 MW will be gradual, according to demand, while anticipating what is up ahead. "When we fill up, let's say 30%-50% of the capacity, we would need to plan for the next one already because it takes about two years to finish a data centre."

"We always have to plan in advance because for this kind of hyperscalar cloud service provider, when they (clients) want the demand they need it quite fast. They cannot wait for three years, four years for your infrastructure to be ready."

Although the AI Park itself is high-tech and futuristic, data centres themselves are a known quantity, and Tee could point to more than a few hosted by Malaysian GLCs. "Data centres are not new in Malaysia, (dating) from the early 2000s onwards." Nevertheless, to remain competitive, they have to be continuously modernised.

What is forward-thinking is the ambition for what such large-scale data centres can mean for the country. Tee points to national digitalisation initiatives such as JENDELA, the country’s strong push for digitalisation and cloud adoption, as well as Bank Negara’s recent Risk Management in Technology policy paper that includes how financial institutions can utilise cloud computing services securely.

Tee sees data centre, cloud computing and AI development all pointing in the same direction. "We will focus on AI R&D in our AI City, whereby we will help to commercialize, and also bring in technology to be deployed,” he says. “Digital technology is probably now growing at double the speed compared to the last five years. Therefore over the next 20 years, a lot of things are going to play out.” And you can expect that there will be some discomfort !