Where artificial intelligence lives: South-east Asia’s data centre boom
Sign up now: Get insights on Asia's fast-moving developments
Racks of servers seen inside an operational Microsoft data centre in Karawang, West Java.
PHOTO: AFP
- South-east Asia is experiencing a data centre boom, driven by surging AI demand and an expanding user base, with capacity projected to triple by 2030.
- This tech expansion strains energy grids reliant on fossil fuels and depletes water resources, posing significant environmental challenges for the region.
- Microsoft invests billions in advanced, water-efficient data centres but future AI demands may still intensify resource consumption, despite efforts to green grids.
AI generated
KARAWANG, Indonesia – Non-stop buzzing fills a windowless Microsoft data centre near Jakarta, part of a tech construction boom sweeping South-east Asia that promises economic opportunities but is also hungry for resources.
As demand for artificial intelligence heats up,
New data centres – warehouse-like facilities that store online files and power AI tools from chatbots to image generators – are mushrooming worldwide, and the sector is growing particularly fast in Asia.
AFP was recently granted rare access to a Microsoft data centre in Indonesia that is part of the new boom. No company logo was visible on the vast boxy exterior of the centre, and visitors were admitted only after careful security checks.
Keeping the systems whirring is a constant operation, with technicians on site even during religious holidays.
Data centre capacity in South-east Asia is projected to triple from 2025 levels by 2030, driven by a tenfold surge in AI use, according to a KPMG report.
“We expect every app, every workload, every user to be using AI in some part of their workflow” in just a few years, said Mr Alistair Speirs, a manager for infrastructure at Microsoft.
But many of Asia’s data centres will add demand to power grids
And to keep servers from overheating, they will place new pressure on often-stretched local water supplies.
AI at work
At the Indonesian data centre, racks of metal-cased servers in tall white cabinets were busy answering AI queries for local users – an intensive, heat-generating process.
A “closed-loop” water cooling system, which works a bit like a car radiator and does not require regular refills, prevents them from malfunctioning.
Higher-performance chips “require a lot more intensity”, said Ms Noelle Walsh, head of the company’s cloud operations. “We’ve had to adapt our data centres’ designs to accommodate different power structures and different cooling mechanisms.”
Super-connected Singapore was long South-east Asia’s data centre hot spot, but the city-state halted developments between 2019 and 2022 over energy, water and land use worries
That, along with an explosion of AI interest after ChatGPT’s debut, brought a surge of data centres to neighbouring Malaysia, and increasingly Thailand, Indonesia, the Philippines and Vietnam.
“The boom is there”, with companies racing for “first-player advantage”, said Mr Trung Ghi of consulting firm Arthur D. Little.
Hosting data centres is a “win-win situation” for governments, he said, noting that it boosts business efficiency with faster online tools and grows local economies as people come to work at new tech parks.
Hyperscale
The data centre expansion will increase demand on power grids that are still heavily coal-dependent. Power consumption by data centres in Indonesia, where coal generates nearly 70 per cent of electricity, will likely quadruple by 2030, according to energy think-tank Ember.
Microsoft’s Jakarta facilities, spread out to mitigate risks from earthquakes and floods, are part of a US$1.7 billion (S$2.14 billion) investment with a potential “hyperscale” capacity that would need hundreds of megawatts of electricity.
The company says it works to “green” local grids by incentivising energy transition plans.
“We don’t build power plants, but we work with utility providers,” Microsoft’s Ms Walsh said.
“In some parts of the world, it is wind power. In other parts of the world, it is solar. We also use hydropower and, in some countries, it’s nuclear. So we support all of those.”
Ms Noelle Walsh, Microsoft’s president of cloud operations, says Microsoft’s data centres use various sources of energy.
PHOTO: AFP
Microsoft recently signed a deal with Indonesia’s state-owned electricity provider to raise the nation’s renewable energy capacity by around 200MW over a decade.
Sinking city
Microsoft’s rivals Amazon and Google, as well as Chinese tech giants Alibaba and Tencent, also run data centres in the Jakarta region.
The metropolitan area of 42 million is sinking
The data centre boom “will put even greater strain on the region’s water resources, which have historically been overexploited and badly managed”, said Dr Olivia Jensen, a scientist from the National University of Singapore.
Microsoft projects that water consumption will grow until 2028 before stabilising at 660 million litres the year after, as the company adds more closed-loop systems.
“We’re evolving fast, and what we’re building now will consume zero water on a daily basis,” Ms Walsh said.
As AI technology develops apace, the company has swathes of land reserved on its Jakarta site for future builds.
But next-generation systems will likely require more computing power, Arthur D. Little’s Mr Ghi warned.
“If these things get larger and larger and more thirsty, then something has to give,” he said. AFP
