Earlier this week, US-based tech company Supermicro signed an MoU with Vietnam’s Sovico Group on data centre development in Vietnam.

In a meeting with Party General Secretary, State President To Lam during his working trip to the United States last week, Wally Liaw, founder and senior vice-president of business development at Supermicro, said the company proposed cooperation with Vietnam in developing data centres and server system manufacturing.

“Vietnam is a promising market as it has policies to encourage the development of high-tech sectors. We see enormous potential for AI growth in Vietnam, and we are committed to playing a part in that journey,” Liaw said.

As reported by Reuters in August, Google is mulling building a hyperscale data centre, in what would be the first such investment by a big US technology company in Vietnam. The hyperscale data centre could be developed near Ho Chi Minh City.

Google’s move was motivated by the large number of its domestic and foreign cloud services clients in Vietnam and the country’s expanding digital economy, a source told Reuters, noting it was one of the fastest-growing markets for YouTube, Google’s popular online video sharing platform.

The country has witnessed some acceleration in hyperscale data centres, with a joint venture between VNG Corporation and ST Telemedia Global Data Centres committing to develop 60MW in Ho Chi Minh City. In July, CMC Corporation announced a plan to build hyperscale data centre in the city. In May, Alibaba also revealed plans to build a data centre in Vietnam to store data locally, in compliance with legal requirements.

A report released by Fitch Solutions in July showed that Vietnam has liberalised its data centre market by lifting the previous 49 per cent foreign ownership cap, enabling full foreign investment in data centres. The initiative seeks to ignite global investor interest to realise Vietnam’s AI. Vietnam is anticipated to receive approximately 100MW of data centre capacity over the next two years, against a current live capacity of approximately 30MW.

“The liberalisation of Vietnam’s data centre market as highly beneficial to wider digital transformation ambitions, especially as the local addressable market for data-intensive infrastructure remains strong. In 2024, one of the main catalysts that will continue to foster the growth of Vietnam’s data-intensive industries is the digital infrastructure master plan for 2030,” Fitch Solutions said.

According to the fifth annual Global Technology Report released by Bain & Company last week, the market for AI-related hardware and software is expected to grow between 40 and 55 per cent annually, reaching between $780 billion and $990 billion by 2027. AI workloads could grow 25 to 35 per cent per year through 2027 and, as it scales, the need for computing power will radically expand the scale of large data centres over the next 5-10 years.

The report pointed out that AI will spur growth in data centres, from today’s 50-200MW to more than 1GW. This means that if large data centres cost between $1 billion and $4 billion today, they could cost between $10 billion and $25 billion five years from now.

These changes are expected to have huge implications on the ecosystems that support data centres, including infrastructure engineering, power production, and cooling, as well as strain supply chains.