Market Trends of Vietnam Data Center Cooling Industry
IT and Telecom to Hold Significant Share
- The telecommunications industry is looking toward institutionalization to supervise and promote digital transformation, making the process a foundation for developing the digital economy and society.
- The Vietnam Radio and Electronics Association suggested that 80% of Vietnamese data are created abroad. The country is taking necessary measures to produce data in Vietnam and aims to generate revenues from the national data infrastructure, which may account for 1% of the GDP by 2025. Interconnecting data centers and providing connectivity are vital to network requirements, resulting in high storage resources and energy consumption, necessitating data center cooling.
- About 80% of the data centers in Vietnam are operated by local telecommunication companies. Major players include VNPT IDC (7 facilities, 2 of 10,000 sqm, others under 2,000 sqm in addition to joint-ventures in other projects of large scales from 5,000 - 6,000 sqm); Viettel IDC (5 facilities, 1 of 10,000 sqm, 3 of 3,000 - 6,500 sqm, 1 of 500 sqm), and others.
- Data centers are energy and carbon-intensive types of property due to the constant operation of cooling systems, IT equipment, power generators, and facility lighting. In fact, carbon emissions from data centers contribute up to 3.7% of total greenhouse gas emissions, placing it ahead of aviation (2.4%), shipping (2.3%) and rice cultivation (1.5%).
- The deployment of 5G networks may boost the region's digital economy and lead to higher demand for high-bandwidth networking infrastructure, leading to major data center constructions and cooling solutions. For instance, in November 2021, Amazon Web Services (AWS) announced AWS outposts in Vietnam.
- Vietnam's data center (DC) market is thriving, with both local and foreign companies looking to develop more DCs in the Southeast Asian country as demand for data storage continues to grow. A key reason is the implementation of a new data localization rule in Vietnam in 2022, which has resulted in increased activity in DC investments. Efficient management of thermal loads within telecom facilities and electronic enclosures is essential, which will lead to major cooling solution demand.
Understand The Key Trends Shaping This Market
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Liquid Cooling to Hold Significant Growth
- With the implementation of the data localization law in Vietnam, data center investments are increasing on a YoY basis. The country is witnessing investments from new entrants such as Data Center First, Edge Centres, Infracrowd Capital, and Worldwide DC Solutions. Existing operators are expanding their presence in the country by investing in the new facility and expanding the existing facility.
- Regarding network connectivity, the country has five existing submarine cables connecting to APAC & EMEA countries and the US. Asia Direct Cable (ADC) and Southeast Asia-Japan Cable 2 (SJC2) are the two upcoming submarine cables expected to be operational by 2023/2024.
- The Government has launched the digitalization initiative known as Digital Transformation Program 2025, which aims to transfer around 50% of the business to digital platforms by 2025. In the country, the 5G network connectivity increase drives the demand for edge data center deployment and offers last-mile connectivity and lower latency services. In August 2022, Amazon Web Services (AWS) announced the launch of edge data centers in Hanoi and Ho Chi Minh City in Vietnam.
- In February 2022, the Ministry of Information and Communication of Vietnam announced its research plans for developing 6G technology to meet the demand from the fastest-growing technology sectors.
- Due to supply chain disruptions, the country witnessed a chip supply shortage. Several chip manufacturers are expanding their footprints with new manufacturing units to overcome the challenges. For instance, in August 2022, Samsung announced that they are investing around USD 3 billion to develop a chip manufacturing plant in Vietnam, and they plan to start trial production in July 2023.
