Google, a subsidiary of Alphabet, is said to be contemplating the construction of a substantial data centre in Vietnam, according to a source privy to the plans. If the plans proceed, this will mark the first significant technological investment of its kind by an American company in the Southeast Asian country.
The source, who chose to remain anonymous due to the confidentiality of the information, indicated that Google is considering the establishment of a “hyperscale” data centre in proximity to Ho Chi Minh City, the economic drive of southern Vietnam. The exact size and scale of the projected investment was not disclosed. Such an investment could significantly boost Vietnam economy, a country which has struggled to attract overseas capital to its data centres due to its inconsistent infrastructure, causing big tech firms to set up centres in competitor countries within the region.
Although the timeline for Google’s decision is uncertain, the source mentioned ongoing internal discussions and speculated a possible completion date as far as 2027. A spokesperson for Google refrained from commenting on the plans. Hyperscale centres, the most substantial in the industry, are known to consume power on a level equivalent to a large city.
Considering the industry benchmarks in a report on Vietnam’s data centres by real estate consultant Jones Lang LaSalle, a hyperscale data centre with a power capacity of 50 megawatts (MW) could fall in the cost range of $300 million to $650 million.
The source attributed Google’s interest in Vietnam to the high number of its domestic and international cloud services clients based here coupled with an expanding digital economy. The source highlighted that Vietnam’s market is among the fastest-growing for YouTube, Google’s popular online video-sharing platform.
The existing leading operators in terms of computing space, according to an internal market report seen by Reuters, are IDC Becamex, an industrial investment company, and telecommunications firm VNPT, both state-owned Vietnamese enterprises.
Notwithstanding, it was reported by the Nikkei in May that Chinese e-commerce firm Alibaba was also mulling over establishing a data centre in Vietnam. The company has not commented on this report.
Even though demand for digital services is surging among Vietnam’s 100 million inhabitants, the country has been bypassed by most foreign investment in the sector due to intermittent power outages, uncompetitive investment incentives and an outdated internet infrastructure reliant on aging subsea cables, according to industry insiders.
In comparison, Singapore, Malaysia and Thailand are leading within Southeast Asia, having successfully attracted significantly higher investment from global tech companies.
In a recent statement, Google declared their plans to expand into Malaysia with an investment of $2 billion, marking the inauguration of their first data centre and Google Cloud sector in the nation. Infrastructural development abroad has historically been difficult due to constraints on foreign ownership and rules regarding data localisation, yet these hurdles have been lessened following legislative adjustments in Vietnam last November, which now permit international data centre operators to maintain complete ownership.
In spite of rigorous cybersecurity regulations in Vietnam, and ongoing disputes with global tech firms over local data storage — an irregularly enforced prerequisite — Google remains intent on progressing in the country. The tech giant is making preparations to establish a representative office, and has started recruiting engineering, marketing and other skilled professionals with job postings on LinkedIn.
A Google spokesperson disclosed to Reuters that the establishment of a local team will enhance service provision to their Vietnamese-based advertising clients, whilst also bolstering the nation’s digital revolution.
Furthermore, Google Vietnam’s Managing Director, Marc Woo, announced last month that they’re providing 40,000 scholarships for fundamental AI courses in Vietnam, and significant funding of $350,000 each for 20 selected AI startups.
The tech giant already collaborates with a broad network of local suppliers who facilitate the assembly of their products, such as Pixel smartphones. – Reuters
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