Is the Philippines ready to be APAC’s next Data Center Hub?

It’s been two years since the pandemic catapulted organizations to embrace digitalization, pushing companies to further invest in improving their technological capabilities. With this shift, regional demands in data centers are growing exponentially, particularly with the rise of smart city trends, e-commerce, cashless transactions, the adoption of cloud technology, and the need for faster internet.

In a recent commentary, Fitch Solutions Country Risk and Industry Research expects a significant investment into digital infrastructure and data center development in the entire SEA, as digitalization keeps pace amid the pandemic. Meanwhile,  Research and Markets noted that the APAC data center market will witness at least USD 94 billion worth of investments by 2027, growing at a 6.30 percent compound growth rate (CAGR) from 2022 to 2027.

This trend is also seen in the Philippines. Since organizations are forced to maximize the use of the digital platform, it accelerated the growth of the country’s data center market – now second overall among SEA countries in terms of development, according to the Department of Trade and Industry (DTI). The country’s capital, Manila, has a CAGR of 14.2 percent, next to Vietnam’s Hanoi with 14.5 percent.

“APAC’s Next Hyperscaler Hub”

Several companies have already announced their data center investments in the Philippines. For instance, a telco giant gears to set up a telco agnostic hyperscaler data center installation in the country. Meanwhile, a cloud computing firm recently expressed its intention to establish its first data center in Manila to expand its footprint in Asia. A Singapore-based firm also recently announced its plan to put up the country’s largest hyperscale data center located in Cainta, Rizal.

Several factors drive this trend. First, cloud spending among enterprises in the Philippines is expected to grow from $1.8 billion to $2.6 billion in 2024, according to data analytics and consulting firm Global Data. Organizations planning to put up their data centers can also take advantage of the country’s talent pool and its ready infrastructure support, such as telecommunications, connectivity, and presence of data centers for colocation, and the country’s renewable energy readiness, according to DTI.

With these plans set to start this year and as the country’s digital and economic profile grows, the Philippines is poised to be the next strategic hyperscalers hub in APAC. These hyperscale data centers refer to massive business-critical facilities designed to efficiently support robust, scalable applications. The government identifies these organizations as one of the key sectors to promote under its investment promotions campaign, making it easier for hyperscalers to expand their businesses in the country by setting up their cloud and network infrastructure.

Evolving Data Center Landscape

As these trends arise, Vertiv, a global provider of critical digital infrastructure and continuity solutions, said that organizations planning to build their facilities in the country need to become aware of the changing data center environment.

“Organizations must be quick to catch on the rapidly changing data center landscape, particularly amid the ‘never normal.’ This will help them ensure their success now and in the future,” said Jason Lim, country manager of Vertiv Philippines.

Vertiv has long been helping organizations across the country, including tech hubs such as Davao and Cebu, to ensure their business continuity. Formerly known as Emerson Network Power, Vertiv brings cutting-edge solutions to ensure uninterrupted operations, optimal performance, and scalability of data centers, communication networks, and other critical IT facilities. 

It offers Liebert power and thermal management solutions that help organizations continuously access vital applications, protect their IT environment, and grow and adapt to changing requirements. 

To help organizations assess, Vertiv listed some of the trends that will shape the data center industry this 2022:

Climate-friendly and sustainable data centers

Over the past year, Filipino consumers have been shifting to more sustainable products and services. A recent Kantar report revealed that 75 percent of Filipino consumers patronize brands that offer ways to alleviate environmental impacts, urging companies to embrace sustainable practices. This trend is also seen in the data center industry.

While the data center industry started to embrace climate-friendly practices in the past years, 2022 will be the time operators will purposefully join the climate effort. According to Vertiv experts, some organizations will adopt sustainable energy strategies for their operations, where they will utilize a digital solution that matches data centers’ energy use with 100% renewable energy. It will also function on 24/7 sustainable energy.

These Hybrid Distributed Energy systems will provide alternating current (AC) and direct current (DC) power to data centers, improving their efficiencies and enabling them to operate carbon-free. Meanwhile, zero-water thermal systems and refrigerants with low global warming potential (GWP) will be in-demand.

Accelerated adoption of AI

As today’s networks get more complex and distributed and the augmented and virtual reality demands of the metaverse even become prominent, the need for real-time computing and decision-making is critical. And with an increasingly common hybrid model of work, public and private clouds, colocation, and edge, full-time manual management will be challenging. To optimize the performance of these networks, Artificial intelligence (AI) and machine learning will be vital.

In the Philippines, DTI previously noted that Artificial Intelligence (AI) adoption can increase the country’s gross domestic product (GDP) by 12 percent or equivalent to USD92 billion by 2030.

The rise of post-pandemic data centers

Nowadays, remote work, e-commerce, telehealth, and video streaming are becoming the norm. As a result, more activities will be focused at the edge. A recent VMware research revealed that workload distribution to a data center would increase from the current 5% to 30% over the next five years.

A report by Cushman & Wakefield, on the other hand, revealed that data center construction of some 2.9 gigawatts would be underway worldwide from 1.6 gigawatts in 2020 to meet the needs of the post-COVID world.

Integration of larger systems

For years, various data center equipment providers have used integrated systems that allow modular capacity additions. However, in 2022, data centers will work with providers to better integrate larger systems, which will enable seamless interoperability. Reduced construction, minimized deployment costs, and flexible capacity management will benefit this integration.

Make building and maintaining data centers possible

With the rise of data centers in the Philippines, and as its landscape continues to evolve, organizations need a partner that can deliver service solutions to support the changes in the infrastructure and enable critical solutions to work smoothly—this is where Vertiv comes in.

Vertiv makes expanding core data center and critical facility capacity accessible by using modular integration techniques to design and build data centers anywhere in the world effectively. The company tailors the solution for its application, pre-engineering, pre-configuring, pre-testing, and pre-validating against its specific needs and expectations. These solutions are supported by a global manufacturing and supply chain footprint, built on decades of leadership in data center and telecommunications applications.

To learn more about how Vertiv supports the continuity of today’s vital business, visit Vertiv.com.