CNA Explains: Can Singapore stay in the data centre game amid regional competition?

Key Concepts

• Data Center: A facility that houses computer systems and associated components, such as telecommunications and storage systems.
• Computing Power: The processing capability of a computer system, often measured in megawatts (MW).
• Cloud Operations: The use of remote servers hosted on the internet to store, manage, and process data, rather than a local server or a personal computer.
• AI Training: The process of feeding large datasets to machine learning models to enable them to learn patterns and make predictions.
• AI Inferencing: The process of using a trained AI model to make predictions or decisions on new, unseen data.
• Free Cooling: A method of cooling that uses ambient outside air to cool the data center, reducing reliance on mechanical cooling systems.
• Small Modular Reactors (SMRs): Compact nuclear reactors designed for easier manufacturing, transportation, and assembly.

Data Center Landscape in Asia and Singapore's Position

Asia is a significant hub for data centers, accounting for over a third of the world's total computing power. Established hubs include India, Japan, China, and Singapore. Southeast Asia is emerging as the next hotspot. This boom is driven by the increasing demand for next-generation technologies like Artificial Intelligence (AI) and machine learning, as well as digital services such as video streaming, all of which generate and rely on vast amounts of data stored in data centers.

Singapore, historically a strong tech hub with regional headquarters of major tech companies, has been a vibrant data center market. However, a moratorium on new data center development from 2019 to 2022, due to resource constraints, created a pause. While the moratorium has been lifted, restrictions on building new data centers persist. This has led to countries like Malaysia and Indonesia, particularly Johor, attracting spillover demand.

Singapore's Data Center Model vs. Regional Competitors

Singapore's data centers, such as Equinix's SG5, are characterized by vertical growth due to limited land. This model, occupying significant space (e.g., three and a half football fields), presents engineering and design challenges, leading to higher development and end-user costs compared to horizontal, single-story buildings common in markets like Johor.

Key Differences:

• Singapore:
  • Vertical construction.
  • High density of customers within a single building (thousands of customers).
  • Diverse customer base including financial services, insurance, healthcare, and cloud computing companies.
  • Value proposition: Strong ecosystem, direct connectivity between cloud providers and telcos, diversity of services.
  • Higher cost due to land scarcity and vertical design.
• Johor (Malaysia) / Other Markets:
  • Horizontal, single-story construction.
  • Often single-user facilities.
  • Value proposition: Economies of scale, lower costs due to abundant land and resources.

Resource Constraints and Singapore's Strategy

Singapore faces significant challenges with limited land, water, and power, which are crucial resources for data centers that operate continuously and consume large amounts of electricity and water, especially for cooling. While countries like Malaysia and Indonesia have ample resources, Singapore must innovate to maintain its position.

Despite these constraints, Singapore is investing billions in data center development to anticipate future demand, particularly for AI. The country is focusing on:

• AI Inferencing and R&D: While Singapore cannot compete on the sheer scale of AI training capacity (e.g., Johor planning 4,400 MW vs. Singapore's 1.4 GW over 20 years), it aims to be a leader in AI inferencing and AI research and development.
• Innovation in Cooling Solutions: Singapore has built the world's first data center test pit for tropical climates. This facility allows for the development and testing of high-efficiency cooling solutions adapted to hot and humid conditions, which can then be exported across Southeast Asia. Traditional "free cooling" methods relying on lower outdoor temperatures are less viable in Singapore.
• Exploring Alternative Data Center Designs: Singapore is exploring options like floating data centers and underground data centers.
• Investigating New Power Sources: There is interest in exploiting nuclear power, specifically small modular reactors (SMRs), though significant technological development and public perception management are required.

Resilience and Future Outlook

The data center industry is noted for its resilience amidst global trade and geopolitical uncertainties. While other Southeast Asian countries are rapidly expanding their data center capacity by leveraging abundant resources, Singapore, despite being land-poor and resource-scarce, is determined to remain competitive. Its strategy involves attracting new players and diversifying its ecosystem.

The video concludes by posing a critical question: "Will today's innovation become tomorrow's problem?" This highlights the ongoing challenge of balancing rapid technological advancement and data center growth with environmental sustainability and resource management.