Market Trends of South Africa Data Center Cooling Industry
The IT and Telecom Segment is Expected to Hold a Significant Market Share
- South Africa's strategic position and supportive business environment make it an advantageous location for data center investments. The country's data center cooling market is fueled by the growth of digital technologies like AI and big data, the increasing adoption of cloud services, and the need for huge data storage and processing capabilities. This is evident in the investments made by major cloud providers such as AWS, Google, Microsoft, Huawei, and Oracle. For example, in April 2023, AWS announced plans to invest USD 1.66 billion in expanding its cloud infrastructure in South Africa by 2029.
- Rapid technological advancements and the adoption of new technologies (such as AI and IoT) require advanced data center solutions in the country. Businesses in South Africa are adopting GenAI technology, enabling quicker digital transformation and increased reliability. In 2024, a survey conducted by Worldwide Worx, in collaboration with Dell Technologies and Intel, polled 100 IT decision-makers from major enterprises in South Africa. The findings revealed that 45% of respondents who were not utilizing GenAI intended to adopt it, signaling a receptive market to this emerging technology. Another factor that supports the growth of the market is the development of robust ICT infrastructure.
- The segment may continue its dominance due to the growing 5G connections. The 5G mobile data speed is expected to grow significantly and reach 407.59 Mbps by 2029, suggesting increasing data traffic and rising demand for data center servers in the segment.
- In South Africa, the telecom industry is advocating for digital content and service providers to contribute to the funding of network infrastructure rollouts, citing their significant role in generating internet traffic. Nomvuyiso Batyi, CEO of the Association of Comms and Technology (ACT), emphasized that revenues from over-the-top (OTT) platforms and the success of the OTT model hinge on access to high-quality, reliable, and efficient network infrastructure. Mobile operators, including Vodacom Group and MTN Group, invest approximately 41 billion rand (USD 2 billion) each year to expand their networks. Such instances in the market are expected to create more need for data centers, boosting the demand for data center cooling infrastructure in the coming years.
Understand The Key Trends Shaping This Market
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Liquid Cooling is Expected to Hold a Significant Share
- Liquid cooling offers many benefits in data centers, making it an attractive option for cooling computing environments with high performance. It is more energy-efficient than conventional air conditioning. It reduces the need for overcooling and improves the energy efficiency of data centers by providing precise temperature control.
- In South Africa, in order to serve the growing requirement of data storage in the region, the key data center operators are coming up with huge IT load capacities. This results in generating more heat from the servers, which require cooling solutions that provide efficiency and capacity benefits.
- In January 2023, ADC commenced construction on new facilities in Nairobi, Kenya, and Cape Town, South Africa. This initiative came from earlier expansions in South Africa and Ghana as the company advanced its plans for data center constructions in Abidjan, Lagos, Cairo, and Casablanca. Additionally, in April 2023, Cassava Technologies, the parent company of ADC, committed a substantial investment of USD 249 million in South Africa, channeling the funds through its subsidiaries: Liquid Intelligent Technologies, Africa Data Centres, and Distributed Power Africa.
- Data center operators are breaking new technological ground with technology partners such as Rittal. In April 2024, Rittal introduced a new cooling solution (direct-to-chip) that delivers over 1 megawatt of cooling output, paving the way for AI. As per a study conducted by Google, the interest in artificial intelligence (AI) in South Africa increased by 370% in 2023; it increased by 650% over the last five years. The demand for computing power is increasing, necessitating a new level of scaling, cooling, power distribution, and energy efficiency.
- As data centers become increasingly essential for businesses, the need for efficient cooling solutions becomes more pressing. The excessive heat generated by data centers can result in system downtime, equipment damage, and increased energy consumption. To address this issue, Engineered Fluids, which specializes in single-phase immersion cooling, launched its innovative immersion cooling solution in South Africa in April 2023. The coolant is non-conductive, non-corrosive, and biodegradable, and the servers are designed to be submerged in the coolant. Companies such as Vertiv, Rittal, Gigabyte, and others offer immersion cooling systems to directly address the rising demand for energy-efficient cooling solutions in the South African market.
