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Contents A Region of Differences

4. India’s market heats up After years of slow growth, a flurry of investments and partnerships

alk about "the APAC region" and you make it seem like the whole area of Asia Pacific is some sort of definable, uniform entity. Nothing could be further from the truth.

6. S ingapore’s sustainable drive Sustainability research that could blaze a path around the world 8. Advertorial: Building a sustainable edge to power the next decade of digital growth 10. A new APAC hub? Singapore’s moratorium might be a boon for Malaysia 12. China: keeping to the plan The 14th Five Year Plan could see more, greener data centers 14. J apan: insular growth As the country experiences a shift to the cloud, demand is booming

The most inclusive definition of the APAC region takes in China and India, and includes more than half the world's population - the majority of it living within those two super-states. Politically, APAC includes India's multi-party democracy, China's Communism, and a lot of other possible forms of government. Culturally and technologically, there's a broad spectrum across the region. But for our purposes, there's one common factor. To take part in the development of society, every nation in APAC wants more digital services and that requires more data centers. And everyone wants them to be viable and sustainable. Here's how that plays out in five leading APAC states.

India

6 12

Forget what you've heard about the problems with India's infrastructure. It's not the most reliable electrical grid in the world, but it's supporting massive growth, as the digital economy really gets going there. It's a land where partnerships work and local knowledge is needed. It's also got growing privacy and building regulations, which will shape the market (p4). "There's a rapid innovation because there's not the technology debt that exists in other markets," says Digital Realty CTO Chris Sharp.

Singapore Feeling the effects of its early success as a data center hub, Singapore has had to take stock. It's ideally placed for its role as the leading APAC hub, except it's a tiny country with a lack of space and renewable power. Can Singapore's technocratic mindset create really sustainable facilities inside a metropolitan island? If it does, it can teach the world (p6).

Malaysia On the other hand, neighboring Malaysia has its eyes on Singapore's crown. It's got skilled staff, cheap land, and more renewable power than Singapore can muster. Let battle commence (p10).

China It's the biggest political power, the biggest polluter, and has the biggest opportunity for growth and improvement. China also may have an opportunity denied the rest of us. Other nations are seemingly helpless to rein in the hypergrowth created by untrammeled free markets. But China - at least in theory - has a planned economy. Can its latest five year plan show the world how to make data centers our servants, not our masters? (p12)

Japan Finally, a nation with no ambitions to be a hub. In Japan joint ventures are bringing data center capacity from other nations back home. But can it develop the renewable power this requires to enable that? Only time will tell (p14).

APAC Supplement 3

India’s data center market heats up After years of slow growth, a flurry of investments and partnerships heralds India’s digital coming of age

n recent months, Digital Realty and Brookfield have formed a joint venture to develop data centers in India. So have Iron Mountain and Web Werks, EdgeConneX and Adani, and Yondr and Everstone. During that same period, CapitaLand, NTT, STT GDC, PDG, Hiranandani Group, and Reliance Jio have all announced major hyperscale data center projects, while Google opened its second Indian cloud region, and Microsoft started work on its fourth. This flurry of investments is the result

of a confluence of factors. First, there's the very obvious huge market opportunity - the country has around 624 million active Internet users, which could grow to an astronomical 900 million by 2025 according to the Iamai-Kantar Icube 2020 report. Part of this is thanks to the Digital India initiative, a massive $15bn+ government effort to connect the sprawling nation over the past six years. While there are a number of legitimate criticisms of the flagship government project, which may not have been as transformational as was once

DCD Supplement • datacenterdynamics.com

Sebastian Moss Editor

hoped, it has helped connect millions, and brought a number of government services online. At the same time, the entry of the country's largest private sector firm into the mobile network space in 2016 sparked an intense price war that brought mobile data into the hands of millions. When Reliance Industries and its subsidiary Reliance Jio Platforms (India's largest telco) launched the Jio 4G mobile network in 2016, it ran it at a loss to quickly amass hundreds of millions of subscribers. Over the following two years, the average

APAC Supplement

Following an effective lobbying campaign, the government is considering a National Data Centre policy which would class facilities as infrastructure

revenue per gigabyte fell 95 percent, according to Credit Suisse. Backed by his oil fortune, India's richest man Mukesh Ambani was able to rack up tens of billions of dollars in debt, and forced others to do the same. It almost destabilized the entirety of India's telecoms sector - and even helped push the related, but separate, telco Reliance Communications into bankruptcy (with Vodafone Idea possibly set to follow) - but the price war has eased since late 2019. During this time, it has helped massively increase the penetration of the mobile Internet. Prospective data center builders should also be aware of the regulatory environment. While by no means perfect, operating in India is less morally and legally difficult than working in

neighboring China. A long-touted Personal Data Protection Bill threatened to enforce aggressive data localization rules, prompting a surge in data center building. The revised version now only calls for keeping "critical personal data" within the country, but this will still require huge quantities of storage. Data centers were added into the National Building Code in 2016, simplifying some of the site selection and planning approval process, although it is still a complex bureaucratic process - with companies often having to get approval from as many as 36 government departments to begin building. Following an effective lobbying campaign, the government is considering a National Data Centre policy which would class facilities as infrastructure, and simplify the approval process to a single-window system which also covers power availability. However, the policy may focus on just a handful of key zones starting with Navi Mumbai, Chennai, and Hyderabad. Individual states are also developing data center policies, with Tamil Nadu latest to say that it is working on a special set of policies to encourage investment. Finally, India's existing data center market is proving enticing for investors. The country lacks the domestic cloud giants which dominate the sector in the US and China, but a number of Indian data center companies have now operated long enough without issue for foreign investors to feel comfortable partnering with them. "It's a pretty dynamic data center market over there," Digital Realty's CTO Chris Sharp told DCD. "But we can't deliver a like-for-like product [as we do in the West]," he explained. The country is mobile-first - with the overwhelming majority of Indian Internet users connecting via smartphones, and many not owning personal computers at all.

"There's a rapid innovation because there's not the technology debt that exists in other markets"

"It's important to have the right partners that position us to solve for that mobilefirst world and some of the infrastructure required to enable their transition," he said. "There's more mobile subscribers in that market than there are people in North America. So it's a massive market that has some challenges in infrastructure." In 2019, Brookfield Infrastructure acquired 130,000 communication towers from Reliance Industrial Investments and Holdings Limited (another Reliance Industries company), which are used to form the backbone of Reliance Jio’s telecom business. The $3.7bn sale helped alleviate some of Reliance's spiraling debt pile, while it remains the anchor tenant for the next 30 years. It also opens up opportunities for Brookfield to connect to data centers. "Brookfield helps us with getting more aligned and looking at the cell towers and how some of these mobile subscribers are coming into the infrastructure," Sharp said. What the 50:50 joint venture won't involve, however, is putting Edge data centers at the base of cell towers, as was mooted by some operators in the US and Europe at an early stage of the Edge hype cycle. "Quite frankly, with Edge we really haven't seen the workload that needs to be based at the foot of the tower - that's just not here today," Sharp said. "And so with Edge in general, not just in India, we constantly look at how the spectrum is being deployed, and where the breakout happens because that breakout is where you can place applications which then can leverage the spectrum. So the breakout is a critical element." He added: "But equally important is the workload, and the workload is going to have power, density, and latency requirements." In this way, India is very much like any other market - one must understand what the user needs, and what the infrastructure can provide. But, Sharp said, India has one key advantage over more mature markets. "There's a rapid innovation because there's not the technology debt that exists in other markets," he said. With additional reporting by Peter Judge

APAC Supplement 5

Singapore’s sustainable drive Research in technology and renewable energy in Singapore could blaze a path for more sustainable data centers around the world

ushed against the wall by growing environmental concerns, a tropical climate, and surging digital demand that sees data centers gobble up seven percent of the country’s grid power, Singapore has laid down the gauntlet. It has enforced a moratorium on new data centers and accelerated research and investments into energy-efficient data centers and renewable energy sources. But while the plans are decidedly selfserving, the technology innovations and roadmaps wrought could well blaze a path for more sustainable data centers not only in tropical climates but also around the globe.

Limited options The traditional approach to tackling the challenge of cooling hot data centers sustainably is to build them in places where the temperature is cold, or locations with easy access to renewable energy. But Singapore has a year-round climate that is both hot and humid - and renewable energy options are also decidedly lacking. The Singapore National Climate Change

Secretariat (NCCS) set out the problem on its website, noting how practically every source of alternative energy is not currently viable, from a lack of fast-flowing water (hydroelectric), low average wind speed (wind), and narrow tidal range (tidal power). The only viable option is solar power, though even that is hampered by high cloud cover and limited land for large-scale deployments of solar panels.

In June 2021, that the Singapore government and Facebook announced a $17 million (S$23m) project to test novel cooling techniques

Paul Mah SEA Correspondent

DCD Supplement • datacenterdynamics.com

APAC Supplement For the data center industry, the limited options for sustainability greatly simplified the decision metric. After discounting uncertain solutions – such as safe nuclear energy, harnessing LNG cold energy to cool data centers, and importing lowcarbon hydrogen, just two near-term options remain: Increase data center energy efficiency and double down on solar energy. Solar over water The focus on solar led to a decision in 2019 to increase the country’s solar capacity to 2-gigawatt peak (GWp) by 2030. But Singapore is one of the most densely populated cities in the world, of which 56 percent is covered by vegetation. There is limited space to build the vast solar farms needed for a country of almost 6 million. Part of the solution is almost banal: blanket rooftops across the island with solar panels. Beyond that, more solar panels are needed, however. Vegetation acts as a carbon sink and must be maintained, so this means building large-scale floating solar farms on large pools of water such as reservoirs and the surrounding sea. On this front, one of the largest offshore floating photovoltaic (PV) farms and one of the largest inland floating PV farms went live this year, with two more expected to be completed later this year. But even that ambitious sounding 2GWp target will only amount to four percent of the country’s total electricity demand based on current consumption figures. This is nowhere near the seven percent currently consumed by data centers. This is where the next leg of the solar plan comes into play: Establish a network of regional energy grids and tap them for renewable energy. One of the key components fell into place in July, when Sunseap Group signed an MoU with Badan Pengusahaan Batam to build the largest floating PV farm in the world, on a large reservoir in Indonesia’s Batam Island, just 50km from Singapore. According to Sunseap, a portion of the green energy will be consumed within Batam while the balance can potentially be exported to Singapore via subsea power cables. This development effectively exports the floating PV farm expertise which Sunseap gained in Singapore: it played an instrumental role in a floating solar system testbed at Tengeh Reservoir and it built the sea-based floating system in the Straits of Johor. It’s a win-win solution to combat global warming. Putting the proof in the pudding Another key prong lies in enhancing the energy efficiency of data centers. In June

Between 2014 and 2019, Singapore’s total electricity consumption went up by around 11 percent, from 46.4TWh in 2014 to 51.7TWh in 2019 2021, that the Singapore government and Facebook announced a $17 million (S$23m) project to test novel cooling techniques. The Sustainable Tropical Data Centre Testbed (STDCT) is expected to start operation by October this year. This wasn’t the first such initiative in Singapore to explore the concept of a tropical data center. A Tropical Data Center (TDC) project was first initiated in 2016 by the then Infocomm Development Authority of Singapore (The IDA and Media Development Authority were merged late2016 into the Info-communications Media Development Authority, or IMDA). Little has been published about the TDC, but from conversations with those in the know, we understand it was considered a small proof-of-concep. Sources confirmed it was completed in 2019. DCD understands that STDCT is envisioned as a continuation of the TDC work, to validate the optimal operating temperature and humidity setpoints in a tropical data center for reduced energy consumption while ensuring the continued reliability of IT equipment. The search for better energy efficiency is not a purposeless objective. As studies have shown elsewhere in the world, increased efficiency has to some extent offset a massive growth in data center capacity, without energy usage skyrocketing. The seven percent figure for data centers in Singapore was unchanged since 2014. Between 2014 and 2019, Singapore’s total electricity consumption went up by around 11 percent, from 46.4TWh in 2014 to 51.7TWh in 2019. To keep the same share, the actual power consumption of data centers also went up by 11 percent in that time. This is far lower than the increase in capacity during a period of white-hot growth through better energy efficiency, in which capacity increased far faster than power. Taking figures from two different researchers, in 2014, Structure Research reckoned Singapore had 200MW of capacity; in 2019, CBRE found 359MW of capacity in the island. That gives approximately an 80 percent increase in capacity. In Northern climates, data centers are run at close to room temperature. Validating the feasibility of doing this in a tropical climate might be the sort of breakthrough

that Singapore needs. Assuming increases in energy consumption by data centers can be kept low or flat for a season by increasing efficiency, it means the data center hub can dive back into the digital infrastructure race without facing onerous carbon penalties. Building more sustainable data centers Singapore’s focus on sustainability and energy-efficient data centers has the potential to move the needle for the industry. In a twist of irony, the largest and most metropolitan cities that require the most digital services are also those that face the tightest supply of land. Given the majority of the world’s population lives close to the coast, a viable blueprint to leverage floating solar panels built on existing reservoirs can benefit these cities. Moreover, insights about running data centers hotter without degradation in reliability or equipment lifespan will benefit everyone. Other related avenues of research are ongoing as part of the STDCT, including closed-loop water cooling to the rack, which is more energy-efficient and eliminates the water wastage inherent in traditional cooling towers. As data center supply dwindles because the moratorium blocks new facilities, this begs the question of whether it would make sense to redevelop existing facilities to support higher energy efficiency? While it sounds ludicrous at first blush, perhaps financial incentives and technical support can serve to incentivize – and normalize – the redevelopment of older generations of data centers into more energy-efficient facilities. And it can be done by upgrading the data center in sections. Singapore has seen a possible model for upgrading old facilities, too. According to Singapore Business Review (SBR) Princeton Digital Group (PDG) last year successfully converted the former IO Singapore data center that it acquired into a hybrid management environment made up of both modular space (Inherited from IO) and whitespace-raised floor setups. It was done without service downtime for existing clients - and SBR gave it an award. As extreme weather patterns inundate Europe, East China, the US West, and elsewhere, every bit helps. While we can no longer do without digital services, the race to digital does not have to come at the expense of the environment.

APAC Supplement 7

Building a sustainable edge to power the next decade of digital growth Asia Pacific IT professionals are embracing a hybrid IT approach; majority of IT deployments will be edge deployments by 2023.

s businesses turn to the

is growing at 12.5% annually and is projected to

of a genuine hybrid model and demand, as

cloud for their compute

reach $250.6 billion in 2024, according to IDC.

businesses seek to meld the elasticity of the

requirements, there is a

Schneider Electric expects the edge footprint

cloud with the responsiveness that only a local

growing realization that

to continue its rapid expansion over the next

deployment can offer.

not all workloads are

decade, with edge data centers consuming

suited for the public cloud.

1,112 TWh of power or nearly two times that of

and accelerate reaction times, it should be no

traditional data centers by 2035.

surprise that edge computing is growing so

Increasingly, a hybrid IT model encompassing

With its ability to significantly lower latency

‘off-premises’ services, public cloud and

The rise of edge computing

quickly. By pairing edge deployments with the

colocation, and privately owned ‘on-premises’

This rise of edge deployments is not a case

cloud, organizations can unlock the maximum

data centres for the ideal blend of scalability,

of the pendulum swinging back to the server

potential of digital value that they can get from

performance, and control.

room deployments of yesteryear. The growing

their existing applications and IT systems.

Indeed, the global edge computing market

momentum behind edge computing is borne

DCD Supplement • datacenterdynamics.com

The edge will not reduce the relevance of

Schneider Electric

the cloud but complement it, buoyed by the intensive use of digital technologies both by businesses and consumers. Indeed, analyst firm Gartner recently predicted a 75% increase in edge computing and processing by 2025 stemming from the ongoing COVID-19 pandemic. Deployed in small or micro data centers, edge computing will benefit a

“The growing momentum behind edge computing is borne of a true hybrid model and demand, as businesses seek to meld the elasticity of the cloud with the responsiveness that only a local deployment can offer.”

diverse range of industries or sectors from retail, utilities, manufacturing, to Smart Cities

practices, collaborate, and galvanize support

deployments.

for a positive impact on the environment.

The edge in APAC According to the Tech Research Asia report commissioned by Schneider Electric on edge

Some ways that businesses in APAC have

making maximum use of circular materials. For instance, our new 43U EcoStruxure micro data center comes with intelligence

started to make a difference are:

that automatically switches between cooling

• Increase energy transparency: Awareness

modes depending on the real-time needs of

and cloud computing, IT professionals in the

of real-time energy use can change

the system -- for enhanced protection and

Asia Pacific (APAC) have started to embrace

behaviors to meaningfully influence energy

energy efficiency. In the face of an untimely

the hybrid IT approach. 28% of the IT leaders

consumption. And even something as simple

power outage or power trip, this gives the

across APAC are leveraging edge computing

as smart meters can bring about the needed

technician time to arrive at the unmanned

across multiple sites, with an additional 38%

energy transparency for greater awareness of

edge location and rectify the anomalous

more adopters coming up in the next 24

energy use.

situation. Other considerations we typically

months. More than 50% of IT deployments will

• Deploy energy-efficient equipment: By

consider include remote management and the

be local by 2023 – at the edge, in other words.

deploying energy-efficient systems, edge

incorporation of lithium-ion batteries for up to

The sectors that have adopted the edge

deployments can be part of the solution,

10 years of maintenance-free use.

are diverse and range from essential services

not the problem. Depending on where they

such as healthcare to education. The financial

are set up, microgrids can serve to further

an entirely new mode of UPS operation that

improve the PUE of edge deployments.

frees enterprises from having to make the

services industry (FSI) is another vertical that has turned to edge computing, with 63% of

• Leverage analytics and AI: Another way

Our new ECOnversion UPSs represent

trade-off between higher efficiency and

organizations in the FSI sector having adopted

to enhance energy efficiency through AI.

lower levels of protection, or more robust

it, compared to 22% of respondents that said

By aggregating the data from multiple

protection while consuming higher levels

they will move every workload to the cloud.

edge deployments, potential problems can

of energy. ECOnversion breaks the mold

be easily identified and quickly rectified.

by simultaneously offering high efficiency

Building a sustainable edge

and high protection, allowing businesses to

The case for edge deployments becomes even more compelling when one considers new applications on the horizon such as

As we look ahead, it is evident that

prioritize sustainability without sacrificing

autonomous vehicles and smart factories.

sustainability is a crucial consideration in

Many of these applications will generate

more ways than one. Customers want to buy

terabytes of data, which makes them less than

from ethical, sustainable organizations, while

approach to sustainability that spans our

ideal for the cloud. On the other hand, the

the best talents are increasingly seeking out

operations, performance, decision-making,

edge is perfect for data-intensive tasks such as

companies that care about the environment.

and strategy. We are committed to being net-

data processing and cutting-edge AI systems.

To satisfy the rising demand for sustainable

reliability. Schneider Electric is taking an integrated

zero in our CO2 emissions from our supply

A focus on sustainability

edge data centers, Schneider Electric built an

chain operations by 2025 and be completely

Climate change is undeniable, and the

edge sustainability practice with over 2,000

carbon neutral in our operations and supply

responsibility for sustainability falls on every

employees across the globe. This made it

chain by 2040. Now is the time to act.

one of us. And IT deployments and data

possible for us to collaborate on a deeper level

centers are very much in the spotlight here:

with our customers, building sustainable,

By 2035, IT and various digital systems will

energy-efficient data centers by integrating

consume over 8.5% of global electricity, up

reliability and sustainability right from the

from 5% in 2018. Thankfully, organizations

equipment selection and design phase.

around the globe are waking up to the need for urgency. According to McKinsey, the APAC region

At the edge, the Schneider Electric philosophy is to address sustainability through a combination of design, management, and

is starting to act seriously concerning

support. This includes developing repeatable

sustainability. Given the challenging tropical

solutions using the latest and most efficient

environment in large parts of APAC, the

technologies, reference designs to simplify

industry is coming together to share best

planning, deployment, and maintenance, and

Venkatraman Swaminathan Vice President, East Asia & Japan, Schneider Electric

APAC Supplement 9

Malaysia - the rise of a new digital hub? Hyperscalers put off by Singapore’s moratorium might find a welcome in Malaysia

alaysia has a population of 32 million, a sizeable GNP, and a total land size that is some 35 percent bigger than the United Kingdom. It is also undergoing rapid digitization, with various data center providers and cloud players such as Alibaba Cloud and Microsoft Azure established in the country. According to the Malaysia Data Center Market Report, the market there is likely to exceed $800 million by 2025.

But while there has long been talk of establishing Malaysia as a data center hub and potentially dethroning neighboring Singapore, can the country become an important spot for hyperscale companies? Good for data centers “Malaysia is considered one of the prime data center markets in Southeast Asia due to the abundant availability of resources and favorable government policies concerning data center infrastructure,” explained Henrick Choo, CEO of NTT Data Malaysia.

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Paul Mah SEA Correspondent

He ticked off the advantages Malaysia holds, which include the competitive cost of power, ready access to skilled employees, cheaper access to land, and lower construction cost compared to other Southeast Asia countries. There is no question that Malaysia is an important location for NTT – it has a data center campus that has grown to five data centers in Cyberjaya, with the most recent, CBJ5, launched earlier this year. “The establishment of the Multimedia Super Corridor (MSC Malaysia) and

APAC Supplement Cyberjaya in particular, has enabled an open ecosystem that allows the business community to grow progressively. Cyberjaya was developed on the idea for a high-tech city akin to the Silicon Valley,” said Choo. Renewables for hyperscalers Chiew Kok Hin, CEO of AIMS, pointed to the growing number of hyperscale data centers and their impact on the power grid. Hyperscalers, he says, are a major reason why data centers must make haste to tap into renewable resources to blunt the impact of surging power demands on the environment. Malaysia is seen as a mature location for renewable energy, with renewables contributing 18 percent to the country’s energy mix. The country recently revised its plans with a more aggressive target of 31 percent renewable energy in installed capacity in 2025, and 40 percent in 2035. But while this sounds like a haven for hyperscale deployments, Chiew cautioned that directly piping renewable energy into data centers isn’t as simple as it sounds. “Data center power demands typically grow gradually and dynamically according to its IT system requirements or colocation project activation [while] renewable energy systems are more suited for a pre-designed load operation. "Subject to [regulations and capabilities of utility], data centers may need to source for [the right] renewable energy farms to offset its electricity usage.” Chiew is referring to how solar energy has an inherently variable daily cycle – it can be impacted by rain or high cloud cover. To deliver that energy at the time it is needed, requires huge energy storage systems. Hydroelectric power plants are less affected on this front, but locations that are optimal might not be close to existing cities or industrial areas. Another solution might be to purchase renewable energy certificates, which Chiew says AIMS is working on: “We continue to explore the feasibility of renewable energy resources by deliberating our options of acquiring a solar energy system or a globallyrecognized renewable energy certification that encourages the growth and development of renewable energy system.”

Seizing the moment Both Chiew and Choo drew attention to Singapore’s data center moratorium, which they attribute to driving an increase in data center construction in Malaysia. (DCD first reported on the moratorium in 2019, though it was only confirmed officially earlier this year). For instance, as far back as 2018, Singapore-based Bridge Data Centre announced its intention to develop a Singapore data center. Three years on, with no Singapore facility yet, it announced a greenfield facility in Malaysia to complement the two facilities it had earlier acquired in Malaysia. “Singapore has been the financial and ICT hub in Southeast Asia for the past 30 years, and it served as the primary gateway for the industry. However, with the increasing demand in network diversity, data recovery, labor sourcing, and cost to market – it needs an alternate gateway, and Malaysia checked all the boxes,” Choo said. “Given the positive momentum and the country’s cost-effective ability to hyperscale, Malaysia makes a good data center location choice for companies planning for further expansions. This being said, Malaysia’s role in Southeast Asia is not to replace any particular geolocation but to act as a complementary piece in a company’s overall cloud architecture plan,” he stressed. Separately, Chiew highlighted Malaysia’s connectivity to the rest of Southeast Asia, which he says is a strength that can allow Malaysia to complement the major content hub of Singapore by providing regional interconnection to meet growing local needs. Connectivity hiccups An old complaint from a few years back was slow Internet speed that stemmed from inadequate submarine cables landing in Malaysia. But while the connectivity situation has improved significantly, a new wrinkle threatens to take some wind out of Malaysia’s data center sails: In November 2020, a ”cabotage exemption” was repealed. Cabotage refers to the right to operate sea, air, or other transport services within a particular territory. States apply cabotage rules in their own waters to protect their local industries - but in 2019, Malaysia

"Malaysia’s role is not to replace any particular geolocation but to act as a complementary piece in a company’s overall cloud architecture plan"

applied an exemption which allowed foreign-flagged vessels to repair undersea cables. This reportedly sped up subsea fiber projects by increasing options and capacity beyond the single local company with the capacity to perform repairs at that time. Repealing the cabotage exemption would essentially wind back the clock to the previous status quo, and require telecoms firms to apply for a domestic shipping license before commencing work – which can take up to 100 days. Detractors blame the repeal on politics, saying it's Malaysia’s revenge for its exclusion from various subsea cables. On the other hand, the Malaysian Shipowners’ Association claims that Malaysia’s exclusion from certain subsea projects was because local telecommunication players never participated or invested. For now, the decision is “not finalized”, and it is understood that telecommunication providers Telekom Malaysia and TIME are campaigning for a continued exemption. A win for the region Notwithstanding its very real toll on health and the economy, the Covid-19 pandemic dramatically increased digital demand from businesses and consumers alike. Interest in data centers is off the charts in Malaysia, suggested an industry source to DCD. This was attributed to interest from major cloud players yet to enter Malaysia, Chinese tech giants looking to expand overseas and, of course, the ongoing moratorium in Singapore. For now, the battle to be the regional digital hub has already begun. To further spur the digital economy, the Malaysian government in February unveiled a comprehensive “MyDigital” blueprint envisioned to make it a regional leader in the new digital era. The blueprint calls for increasing local data centers to support cloud computing and a government-led cloudfirst approach. As part of this strategy, Microsoft, Google, Amazon, and Telekom Malaysia were all granted conditional approval to build and manage hyperscale data centers and cloud services in Malaysia. But whichever way the data center race shapes up, a stronger data center industry is a win for the region. Chiew summed it up this way: “As Malaysia and Singapore’s data center capabilities grow, so will our human resources and technological capabilities. This leads to an interchange of skills, knowledge, and technology that will further strengthen Southeast Asia as one of the fastest-growing markets for data centers in the world.”

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China: keeping to the plan

emphasized the importance of scientific and technological self-reliance linked to the strong domestic market. The higher R&D spending will be directed to strategic sectors such as biotechnology, semiconductors and new energy vehicles, to progress towards self-sufficiency.” Unlike the previous iterations, the 14th Plan is less about hard economic targets and more about strategic goals. As well as improving domestic manufacturing, there is a focus on circular economies to reduce pressure brought on by US trade disputes. To meet climate goals, there is a strong focus on new energy technologies, as well as a strong focus on improving domestic research & development. Other areas of focus around R&D include quantum information and computing; semiconductors; agriculture; health, biology, and medicine; and deep space, deep sea and polar exploration. The Plan also identifies cloud computing, big data, Internet of things, industrial networks, blockchain, artificial intelligence, virtual reality and augmented reality as important industries of China’s digital economy.

Dan Swinhoe News Editor

The Chinese Government's 14th Five Year Plan could see more data centers built, more focus on green initiatives, and more domestic chip manufacturing

s one of the largest and most powerful economies in the world, China’s areas of focus should be of interest to companies globally. In its latest Five Year Plan, the Chinese Government has outlined a number of priority areas that could have an impact on both the domestic and global landscape with regards to data centers, semiconductors, and related infrastructure. What is in China’s 14th Plan? Based on a practice adopted from the Soviet Union, the Chinese Communist Party (CCP) regularly releases new economic plans every five years. The latest (14th) Plan runs from 2021 to 2025. Amongst other longer-term goals it aims to make China a "moderately developed" economy by 2035. The 14th Plan doesn’t have policies or objectives specifically for data centers – though there is a separate policy document for the sector which we’ll discuss later. But

the Plan has a direct effect on real estate, investment, energy, and IT, which all feed into the data center realm. “China is pledging innovations combining political ecology and digital economy to handle climate change in pursuing an upgraded commitment to the Paris Agreement,” explained a policy brief from French economic research agency, the Center for Prospective Studies and International Information (CEPII). “For this ultimate goal, R&D spending is being strategically reinforced.” The 14th Plan builds on the foundations laid by the 13th; a greater focus on domestic R&D and manufacturing, expanding the middle class, and strengthening the local economy. “Technologically, on the supply side, the 14th Plan envisages self-reliance in critical technologies, despite the economic cold war with the US,” added CEPII. “China’s Fifth Plenum in October 2020 [a precursor event to define the objectives of the 14th Plan]

12 DCD Supplement • datacenterdynamics.com

Real estate & data center investment In its real estate assessment of the 14th Plan, CBRE said it expects investment in industrial real estate to grow rapidly during this period. IDC predicts data generated by China will increase from 7.6ZB to 48.6ZB in 2018-2025, which CBRE says will drive “robust demand” for data centers. The real estate firm also said over half of Chinese investors plan to purchase more real estate in China this year, with respondents “signaling a preference” for industrial assets such as high-quality logistics facilities, data centers, and cold storage. It also said manufacturing clusters would drive up demand for industrial real estate such as business parks, R&D facilities, and laboratories. China is looking both to attract more foreign investment and to incentivize China’s corporations to invest abroad in support of the Belt and Road Initiative. AWS, Microsoft, and even Apple continue to expand their data center footprint in the country, while the likes of Alibaba, Huawei, and Tencent continue to expand abroad. Hong Kong-based Gaw Capital Partners recently made its first data center investments in Asia outside of China through a project in Indonesia. Foreign companies like Microsoft and AWS have to partner with local companies in order to offer cloud services locally – a measure likely to remain, along with strict laws around privacy and access. But there could be greater opportunity to invest in Chinese companies as international players

APAC Supplement look to expand further into China, and Chinese companies grow internationally. Foreign investment companies such as Keppel and CapitaLand are beginning to make greater moves into mainland China, having both made their first investments in data centers in the country this year. Princeton Digital Group recently announced a further $1 billion hyperscale expansion plan in the country. As well as further reform of the banking and finance industries, CBRE said the launch of public REITs will spur investment in industrial property. “China's first batch of infrastructure public REITs will be officially issued this year, with applications already received from nearly 50 projects,” the real estate firm said. “As they are classified as "new infrastructure“, industrial parks, logistics facilities and data centers can be included in underlying assets. The growth of the public REIT market will therefore accelerate the flow of capital into infrastructure.” Energy & renewables While many cryptocurrency mining facilities have been expelled from the country, China still has a large number of fossil-fueled data centers that will likely need to make the transition to renewable energy in the coming years. China has said its emissions will peak in 2030 and aims to decarbonize by 2060. Though Greenpeace has previously warned that the country's tech giants were slow to adopt renewable energy, the Government has identified renewable energy as a target area. It aims to reduce coal consumption and carbon emissions, improve China’s energy security, modernize the energy grid, and build clean energy plants across the country. Reuters reports that China’s grid companies will be compelled to buy at least 40 percent of their energy from renewable sources by 2030, up from less than 30 percent today. FitchRatings reports that China added 71.7GW of wind power capacity and 48.2GW of solar in 2020. There is still a ways to go, however. CEPII reports the country put 38GW of new coalfired power capacity into operation in 2020 – more than three times the amount built in the rest of the world – but also decommissioned more coal plants during the 13th Plan than it commissioned. Currently, only one Chinese company (Chindata) has promised to achieve carbon neutrality. Most use a very small amount of renewable power in their mostly coal-fuelled energy mixes, and power purchase-type agreements are rare. But this is likely to change quickly. As well as the broad 14th Plan, the Chinese government has issued a Three Year Plan

specifically for data centers. The Three-year Action Plan for the Development of New Data Centers (2021-2023) limits the growth of data centers to 20 percent, and sets out a national architecture supporting national cloud hubs, provincial data centers, and Edge data centers. The plan contains some very direct objectives for data center operators in the country, calling for a national average utilization rate of 55 percent by the end of 2021, rising to more than 60 percent by the end of 2023. Power usage effectiveness (PUE) meanwhile, will go down from below 1.35 this year to under 1.3 in 2023. As well as greater adoption of more efficient and green technologies, it’s possible many Chinese companies will look to improve battery technologies to (in part) reduce dependence on backup diesel generators. Change might already be happening. China’s largest retail, JD.com , released its first Environmental, Social, and Governance (ESG) report in May 2021, promising that its data centers would connect to local district heating schemes while new green facilities would have a PUE of 1.21. The company did not set a firm target date to become carbon neutral, however. Huawei recently unveiled a modular data center product capable of a PUE of 1.111, showing that companies can turn Government directives into a competitive advantage. Underwater data centers from Highlander closely modeled on Microsoft’s Project Natick are already processing live data in Hainan and are due to be deployed at scale soon, highlighting rapid innovation in the space. Domestic chips While the world faces an ongoing semiconductor shortage, China faces further supply challenges as US sanctions prevent it from sourcing chips from companies using US technology. Despite investing billions of dollars into domestic capability, China is still “five years behind TSMC”, according to Morris Chang, founder of the world’s leading silicon foundry, Taiwan’s TSMC. China’s logic chip design capability is at least one to two years behind the US and Taiwan. The 14th Plan puts greater focus on improving capability and manufacturing capacity of domestic chips. “The semiconductor industry—particularly the integrated circuits (IC) industry—is a core component of this effort as China sees semiconductor capabilities and supply as intrinsically linked to its economic and national security, a conviction that has sharpened in recent years as US policy has taken aim at Chinese supply chain

vulnerabilities,” said law firm Cnvington in its industry assessment. DCD has long covered the ongoing trade war between the US and China. Beyond the role of Huawei technology in mobile networks, US officials have become concerned over the potential threat other Chinese companies might pose to national security. Since taking office, President Biden has signed an executive order banning US entities from investing in 59 Chinese companies. These include Huawei, chipmaker SMIC, surveillance firms Hikvision, Zhejiang Dahua Technology Co, and AI companies SenseTime and Megvii. Supercomputing companies Sugon, Sunway, Hygon, and Phytium are also on the list. Separately, a large number of Chinese AI and High Performance Computing (HPC) firms are on the US’ Entity List due to their involvement with projects for the Chinese military, which prevents US firms working with or supplying them without express permission from the US Government. The restrictions can also apply to foreign companies that use US products, such as chipmaker TSMC, which recently stopped supplying Phytium Information Technology Co. “China’s new semiconductor policies encourage foreign academic and industry collaboration and Chinese corporate R&D centers overseas,” according to a Congressional Research Service paper. “In June 2020, Chinese firms Huawei and San’an Optoelectronics announced a $1.2 billion R&D center in the United Kingdom to develop semiconductor chips. Many top Chinese technology firms—including Alibaba, Baidu, and Tencent—have US R&D centers. The Chinese Government said it will be investing in a number of manufacturing clusters and creating platforms for collaboration between enterprises, research institutions, and academia. Taiwan recently banned recruitment companies from hiring for jobs in China in an effort to stop highly-skilled semiconductor staff moving to the mainland to help China's domestic chip production efforts. Last year Nikkei reported that more than 100 veteran engineers and managers had been hired from TSMC for two Chinese government-backed chip efforts; QXIC and Wuhan Hongxin Semiconductor Manufacturing Co. Greater investment in domestic technology will also further help domestic manufacturing. KPMG says it expects China to continue to pursue its main goal of becoming a manufacturing powerhouse through “leveraging innovation and connectivity within the manufacturing industry to promote high-quality economic development.”

APAC Supplement 13

Peter Judge Global Editor

Navigating the insular growth of Japan’s data center sector As the country experiences a shift to the cloud, demand is booming

apan is the world’s third largest economy, and Tokyo is the largest cluster of data centers in the Asia Pacific region. It’s got 489MW of capacity, with the same amount in the pipeline, according to real estate data center experts, CBRE. ...but don’t call Tokyo a hub. Hubs are places like Singapore, which serve surrounding countries. Singapore takes the number two position in APAC with 454MW, according to CBRE, despite having a population and an economy which are a fraction of the size of Japan. Singapore is a hub for regional data centers - or at least it has been up till the current moratorium on new facilities there, which is pinching its pipeline. “Japanese data centers serve local demand primarily,” says Jackson Lee, vice president of corporate development at Colt DCS. “It’s not like Singapore, where data centers serve all of APAC, as a gateway.” Be that as it may, local operators agree that demand in Japan is skyrocketing - because Japanese business is going through some big

changes, with a big wave of cloud adoption driving demand at home. “Japan is the world’s third largest economy,” Princeton Digital Group CEO Rangu Salgame points out. “And industry analysts have been predicting, in the coming years, the cloud and colocation sector in Japan is going to grow 25 percent year over year. That's a phenomenal growth on a good size market base. We believe that's a very large market in the making.” Lee agrees that the big boom is coming from cloud adoption: “Over the last three years, we’ve seen significant growth in Japan.” Previously Japanese businesses relied on local systems integrators, he says: ”They had a more conservative approach to going full cloud. Culturally, they wanted more control over their data, and knowing where it sits.” Now, as digitization takes hold, local businesses are adopting the cloud and starting to let go of their on-premises racks, and that’s bringing in a need for more cloud capacity. Lee acknowledges that the pandemic has

14 DCD Supplement • datacenterdynamics.com

sped things up, but he takes a long view. Colt has been operating data centers in Japan for around 20 years and he has seen some big changes as it evolved from a network business to data centers. “We were primarily a network services business when we entered Japan. Data centers were a secondary product and, a lot of times, data center space was given away as part of a network services package. That is not the case anymore: in the cloud world, data centers are growing exponentially. Salgame is a newcomer, but one with a specific mission. Princeton Digital Group (PDG) has set itself the task of building standardized data centers for hyperscale customers in every significant Asian economy - no matter how diverse those markets are. Salgame says: “Hyperscalers continue to invest in Japan, and they see a large, untapped growth coming from digitization by the private sector, as well as the government.” He also sees a big market for local players offering content like gaming and streaming.

APAC Supplement And both PDG and Colt are offering existing customers elsewhere an entry to Japan. Digitization is coming The pandemic has helped the cloud take hold in Japan in two ways, says Lee. It’s driven a move to online working, as elsewhere. But in the Asian region, customers are well aware of potential supply chain problems, so they are keen to book space ahead of time. “A lot of our cloud [provider] customers, they have actually tried to secure additional future supply,” he says. “Use cases like work from home were already there, but the pandemic accelerated things. “It's quite known that you're going to have disruption in the supply chain. Our customers are trying to future proof their product. And the way to do that is to start looking right now to secure data center space immediately.” After being quite insular, Japanese businesses are now “pretty happy” with US cloud providers, Lee says: “There's really only two choices. There's the US, and you can go Chinese if you want to, but there's always more skepticism with going with a Chinese provider given their history. Companies like Amazon and Microsoft have made significant inroads into that country.” Japan doesn’t yet have strong data localization and privacy laws, but Lee sees them coming: “I think every country, at least in the G7, will come up with their own. The Europeans already have one. Maybe the only country that will hold out will be the US. But I can see Japan having one - It makes sense. But it's just not in the works yet.” In the meantime, quite a lot of Japan’s data is hosted in Singapore, Lee says. But regardless of any data localization laws, new use cases are changing that: “If you're just hosting music for your iTunes, no one really cares where it is. It's a completely different thing if you're trying to do CAD drawings, or financial trading - anything that is high traffic and bandwidth intensive.” Power and land The two biggest challenges for Japanese data center operators are power and land, says Salgame: “Each country has its own nuance, and challenges that pop up with land and power. In Japan, power is a big issue. We have been able to find a location where power is not an issue.” Tokyo has been the primary cluster for data centers for some time. There’s a strong market developing around Osaka, but both Lee and Salgame say the most exciting areas now are in Tokyo suburbs, as that core market develops. Colt pioneered the Inzai data center cluster, 50km East of central Tokyo, which Lee paints as a Japanese version of Loudoun

County, Virginia: “Colt was the one that built the first fiber connection from Tokyo center to Inzai. And once you have that one connection, others can easily sell into it. That's the magnet effect.” Colt launched its Inzai 3 data center this year, a 27MW facility next to its existing two Inzai buildings - 90 percent pre-booked before building began. AirTrunk is building a 300MW campus in Inzai, which could be the largest campus in APAC and is due to begin operations with a 60MW phase by the end of 2021. Digital Realty has teamed with local giant Mitsubishi for a joint venture which will build 120MW in Inzai, announced in 2019. But Salgame thinks the future of Inzai is limited by the power factor: “The central business district was the first generation of data centers in the region. Then you saw the emergence of the eastern side of Tokyo, called the Inzai region, which is in the cheaper district. “That's where you saw a lot of data center growth in the recent past. But there, the power has been capped out. There's no potential power availability in the coming years.” PDG has staked out a different location, 30km North of Tokyo: “We picked a location called Saitama City, where we've been able to secure power. The hyperscalers see that the eastern side is going to get capped out, and Saitama is going to be the next logical region for them to form their cluster.” At least one hyperscaler should be happy - Microsoft picked Saitama City for one of its first data centers in Japan, along with a second facility in Osaka. According to Salgame, there’s plentiful power there - its first site has potential for about 99MW: “We round it out to 100MW. It's a nice headline: 100MW in two phases.” Renewable energy? Lee doesn’t see a shortage in Inzai, but he agrees power is important: “The government and the local utility Tepco are investing heavily to upgrade their national grid to keep up with demand. You could find some empty farm land that's suitable, but it's really about having power, as well.” Data center operators want to be carbon neutral, but that’s not possible in Japan, which the IEA admits has an uphill struggle to decarbonize. The vast majority of Japan’s energy comes from fossil fuels, with all the oil and gas imported. There’s a tiny 1.5 percent from hydro, and around four percent from nuclear power, which restarted recently after a hard stop caused by public disapproval after the Fukushima disaster. Data centers are going to add to that problem with the demands they make on Japan’s electric grid. Players like Google,

Microsoft and Digital Realty have shown themselves willing elsewhere to fund renewable power through power purchase agreements to build solar and wind farms. Salgame is hopeful, given Japan’s signature of the Paris climate accord: “There's a tremendous impetus in Japan for green power, and we are seeing a lot of activity towards an improved regulatory framework to buy green power in the market. It's front and center for us, working with third party providers on green energy in Japan.” The trouble is solar and on-shore wind are a problem, with usable land scarce in Japan, and off-shore wind not as promising as one might hope: “The largest offshore wind project in the world today, currently under development off the coast of the United Kingdom, will produce the equivalent of just two percent of Japan’s electricity demand,” says Dr Fatih Birol, executive director of the International Energy Agency. “Plus, the project is in the shallow waters of the North Sea, a setting not available off Japan’s coastlines where the ocean floor plunges precipitously.” Birol says Japan has a “narrow but achievable” pathway to net-zero, which will have to be based on new plays like ammonia and hydrogen - which Microsoft has shown support for. “We will be accelerating our conversations and engagement in the local market,” says Salgame, “to do a lot more proactively, rather than just wait for the industry to get played out.” Take your partners In any economy local partners can be useful. When data center giant Digital Realty entered Japan in 2017, it teamed with Mitsubishi in a joint venture, with facilities in Inzai and Osaka. Equinix has a long-standing Japanese presence with around a dozen data centers, but recently signed a joint venture with Singapore investor GIC to provide capital for hyperscale building in APAC markets including Japan. Acknowledging things are speeding up, the old hand Colt has decided it needs a partner of its own, and this year teamed with the venerable Mitsui corporation. One of Japan’s largest and oldest “keiretsus” (business groupings), Mitsui was founded in 1875, but traces its origins back to a 17th century businessman, Mitsui Takatoshi. “There's a lot of great joint ventures being announced now,” says Lee. “The difference between our joint venture and others like Digital Realty and Mitsubishi, is that Colt has been in the region for nearly 20 years. We know Japan, we have a proven track record of building small and large hyperscale data centers.

APAC Supplement 15

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