APAC Data Centres: AI Demand, Power, and Credit Risks

Thanks, Harry.

The APAC digital infrastructure market is experiencing unprecedented investment driven by the traditional compute, storage, and cloud-driven demand, but equally as well as from increasingly AI adoption.

In future, Fitch expects the nature of these demand drivers to tilt more towards AI-driven demand with increasing AI adoption.

North America market is the largest and will remain so, but new data center developments there face major challenges on account of power access, permitting hurdles due to community opposition, skilled labor shortages, and long lead times for critical equipment.

Therefore, APAC has emerged as a major growth engine.

Institutional investors are pouring billions into hyperscale data centers, subsea cables, and 5G networks across the region.

There is a sizable presence of both Western hyperscaler and cloud service providers, as well as Asian enterprises like Alibaba and ByteDance in the region.

The collaboration of local and global off-takers, increasing in-country demand, which is also supported by data sovereignty requirements, and localization driven by higher execution risks is reflected in the evolution of data center capacities across APAC.

Whilst land, water, bandwidth, and capital are key considerations, grid access and power availability is the key challenge to future capacity build-outs in the region.

It is also determining the evolution towards subregional capacities with power access advantages.

Thanks, Harry.

The APAC digital infrastructure market is experiencing unprecedented investment driven by the traditional compute, storage, and cloud-driven demand, but equally as well as from increasingly AI adoption.

In future, Fitch expects the nature of these demand drivers to tilt more towards AI-driven demand with increasing AI adoption.

North America market is the largest and will remain so, but new data center developments there face major challenges on account of power access, permitting hurdles due to community opposition, skilled labor shortages, and long lead times for critical equipment.

Therefore, APAC has emerged as a major growth engine.

Institutional investors are pouring billions into hyperscale data centers, subsea cables, and 5G networks across the region.

There is a sizable presence of both Western hyperscaler and cloud service providers, as well as Asian enterprises like Alibaba and ByteDance in the region.

The collaboration of local and global off-takers, increasing in-country demand, which is also supported by data sovereignty requirements, and localization driven by higher execution risks is reflected in the evolution of data center capacities across APAC.

Whilst land, water, bandwidth, and capital are key considerations, grid access and power availability is the key challenge to future capacity build-outs in the region.

It is also determining the evolution towards subregional capacities with power access advantages.