Google Eyes Major Investment in Vietnam with Hyperscale Data Center
By Phuong Nguyen and Francesco Guarascio
HANOI (Multibagger) – In a groundbreaking move, Alphabet's Google (NASDAQ: GOOGL) is contemplating establishing a massive data center in Vietnam. This would mark the first significant investment by a leading U.S. tech company in the burgeoning Southeast Asian market.
Google’s Hyperscale Data Center: A Game-Changer for Vietnam
Google is considering building a "hyperscale" data center near Ho Chi Minh City, Vietnam's economic powerhouse. The details of the investment, including its financial magnitude, remain confidential, but sources indicate that internal discussions are ongoing, with a potential completion date as early as 2027.
A Google spokesperson declined to comment on the plans for the data center.
What is a Hyperscale Data Center?
Hyperscale data centers are the behemoths of the digital infrastructure world, often consuming power equivalent to that of a large city. A hyperscale center with a 50 megawatt (MW) capacity could cost between $300 million and $650 million, according to estimates from real estate consultant Jones Lang LaSalle.
Why Vietnam?
Google’s interest in Vietnam is driven by its growing domestic and international cloud services clientele and the rapid expansion of the country's digital economy. Vietnam is one of the fastest-growing markets for YouTube, Google’s video-sharing platform.
Currently, the top data center operators in Vietnam are state-owned enterprises IDC Becamex and VNPT. This potential investment by Google could disrupt the market landscape significantly.
Competitive Landscape and Challenges
Vietnam, with its 100 million-strong population, has seen increasing demand for digital services. However, the country has struggled to attract foreign investment in the sector due to power shortages, less favorable investment incentives, and an underdeveloped internet infrastructure reliant on outdated subsea cables.
In contrast, other Southeast Asian nations like Singapore, Malaysia, and Thailand have advanced further in attracting substantial investments from global tech giants. For instance, Google announced a $2 billion investment in Malaysia for its first data center and Google Cloud region in the country.
Regulatory Hurdles and Recent Reforms
Historically, restrictive regulations on foreign ownership and data localization have posed significant challenges. However, a reform approved in November now allows foreign data center operators to retain full ownership, potentially paving the way for more substantial foreign investments.
Vietnam's stringent cybersecurity laws and its sporadic enforcement of data storage requirements have also been contentious points. Despite these challenges, Google is undeterred and is already establishing a representative office in Vietnam, hiring a team of engineers, marketers, and other professionals.
Google's Commitment to Vietnam’s Digital Future
Google is not only investing in infrastructure but also in talent development. The company has announced 40,000 scholarships for basic AI courses in Vietnam and $350,000 in funding for each of 20 selected AI startups, demonstrating a commitment to fostering local innovation.
Additionally, Google has a robust network of suppliers in Vietnam, including those assembling its Pixel smartphones, further embedding the tech giant in the Vietnamese economy.
Breaking It Down: What This Means for You
For the Average Person:
- Employment Opportunities: New data centers and Google’s expanding operations could create numerous job opportunities in various fields such as engineering, marketing, and more.
- Improved Services: Faster and more reliable digital services as local infrastructure improves.
- Educational Benefits: Access to Google's scholarships and educational programs can enhance skills and career prospects.
For Investors:
- Market Growth: Increased foreign investment can boost Vietnam’s stock market and economic growth.
- Tech Industry Expansion: A major tech player like Google entering the market signals potential for high returns in the tech and digital sectors.
For Businesses:
- Enhanced Digital Infrastructure: Better local data centers mean improved efficiency and reliability for businesses relying on cloud services.
- Partnership Opportunities: Potential for collaborations and partnerships with Google, benefiting from their expertise and resources.
Google’s potential investment in a hyperscale data center in Vietnam could be a transformative move for the country’s digital economy, creating a ripple effect across various sectors and significantly impacting the lives and finances of its people.