Worldwide Data Center Market - Investment Prospects in 9 Regions and 51 Countries

The worldwide data center market is expected to grow at a CAGR of 5.03% from 2022 to 2028.

KEY HIGHLIGHTS/ TRENDS

Adoption of Advanced IT Infrastructure

The data center market has witnessed several new trends in adopting IT infrastructure in data centers. Some trends include the adoption of ARM-based architecture, the adoption of NVMe storage devices, the adoption of converged and hyper-converged infrastructure, the adoption of 200/400 GbE ports, and others. ARM technology is also being adopted by cloud providers such as Microsoft, Amazon Web Services, and Oracle, which have been running ARM-based chips in their data centers. Some leading vendors that offer NVMe storage options include Hewlett Packard Enterprise, Hitachi Vantara, Dell Technologies, NetApp, IBM, and Pure Storage.

Focus On Improving the Sustainability of Data Centers

The increasing data center power consumption and the need to decrease carbon emissions have prompted many service providers to purchase clean, renewable energy sources to power their current and new facilities. There is a high interest in adopting renewable power sources among global and local data center operators. Also, many smaller operators are installing solar panels on the rooftops of their facilities to power the data centers.

Innovative and Sustainable Data Center Power Technologies

Several data center operators are upgrading their data centers from traditional technologies to new ones. Such new technologies will also help companies focus on sustainability in the data center market.

Some such innovations are as follows:

• Adoption of advanced UPS batteries such as Lithium-ion, Nickle-Zinc, and Prussian Blue sodium-ion batteries replacing lead-acid batteries
• Software-Defined Data Centers (SDDC) and AI in power monitoring
• Microgrid adoption in data centers, majorly among hyperscalers
• Floating data centers, underwater data centers, snow-cooled data centers, and boiling liquid for cooling data centers
• Replacing diesel generators with natural gas, hydrogen fuel cells, & hydrotreated vegetable oil (HVO).

Ai-Based Infrastructure Boosting Liquid Immersion and Direct-To-Chip Cooling Solutions

The liquid cooling will witness massive growth among data centers that deploy AI & ML workloads. These technologies require powerful computing capabilities for TPU, where the heat generated exceeds the cooling limit and thus demands superior efficiency to keep the chips working optimally. For instance, most upcoming data center facilities will include at least one data hall to support the deployment of advanced two-phase immersion cooling and direct-to-chip cooling solutions. Meta (Facebook) has announced its plan to pause several new and expansion projects across the U.S., as it wants to create a new AI design for the facilities.

Government Support to Develop Data Centers

Over the past few years, the data center market growth has been focused on countries offering tax incentives. Many state and local governments provide investments and sales tax incentives to attract operators. The U.S. is leading in providing tax incentives to data center operators. Several states in the U.S. provide tax incentives to data centers for investments, job opportunities, and compensation for employees. Several states in India have launched their own data center policies to attract investment and create a global hub for data center facilities. Some of the states in India that have announced their data center policies include Telangana, Uttar Pradesh, West Bengal, Karnataka, Tamil Nadu, Haryana, and Odisha.

Impact of Supply Chain Disruptions

Supply chain disruptions are a major challenge faced by data center developers recently. With the onset of COVID-19, supply chain disruptions increased, leading to a shortage of infrastructure such as power equipment, cooling infrastructure, chips, and other infrastructure. Also, political instability and disturbances between Russia and Ukraine led to a price hike in energy and fuel costs. One of the major shortages faced by operators was chip shortage, which led to a decline in the manufacturing of several infrastructures.

SEGMENTATION ANALYSIS

Facility Type

• In 2022, over 31.5% of the overall power capacity addition in the global data center market was carried out by hyperscalers such as Meta (Facebook), Google, Microsoft, and Amazon Web Services.
• The investment by hyperscalers such as AWS, Google, Meta (Facebook), and Microsoft are majorly concentrated in the US region. However, the operators are moving from the U.S. to the European and APAC regions.
• The colocation operators are continuously expanding their presence across the existing markets and are also involved in entering several new markets.
• Enterprise data center investments were identified to be mostly modular and on-premises worldwide. The majority of these projects support a capacity of < 250 kW. Telco edge deployments are likely to contribute to the growth of enterprise segments.

Data Center IT Infrastructure

• The data center server market is witnessing high growth in high-density servers. The most adopted servers in the industry include rack and blade servers from vendors such as Cisco Systems, Intel, Fujitsu, Hewlett Packard, Dell Technologies, IBM, and Lenovo.
• The data center storage market is currently dominated by HDD adoption, with around two-thirds of the market adopting the technology, with key vendors such as Seagate Technology, Pure Storage, Western Digital, Toshiba, and others offering several storage infrastructures.

Data Center Electrical Infrastructure

• The emergence of microgrids and on-site power generation systems has led to increased energy storage and sustainable energy, thereby leading to increased savings and improved resiliency.
• Data center operators are focused on adopting advanced UPS batteries such as Lithium-ion, Nickle-Zinc, and Prussian Blue sodium-ion batteries. The adoption of Lithium-ion batteries is witnessing strong demand among operators.

Data Center Mechanical Infrastructure

• In terms of cooling systems, free cooling techniques have grown significantly over the last few years across regions with favorable climatic conditions that can use evaporative/adiabatic coolers for data center cooling purposes.
• In data center projects, the investment in cooling systems is expected to be 15−20% of the overall cost, depending on the facility design and IT load. The selection of cooling systems is based on the location, i.e., whether the climatic conditions favor free cooling and have abundant water resources.

Data Center General Construction Services

• Apart from construction, installation, and commissioning services, data centers also invest in improving physical security, monitoring, and management of facilities through data center infrastructure management (DCIM) on a real-time basis.
• The average general construction cost across the U.S. in 2022 was between USD 8 and USD 9 million per MW. However, the cost might change based on locations, increases in commodity price, inflation, and supply chain constraints.

GEOGRAPHICAL ANALYSIS

Americas Region

• The availability of tax incentives, free cooling solutions, renewable energy, and low cost of industrial land and power will drive operators to invest in the Americas region.
• The Americas region is among the world's most mature data center markets. The North American region, which includes the U.S. and Canada, leads the market in terms of investment, white floor addition, and power capacity addition.

European Region

• Data protection laws such as the implementation of GDPR, availability of free cooling solutions, district heating systems, availability of renewable energy, and others are among the major factors that will attract operators to invest in the European region.

Middle East & Africa (MEA) Region

• Increased internet & social media penetration, digitalization initiatives, migration from on-premise to cloud, colocation, and managed services are among the factors driving the data center market in the MEA region.
• The UAE and Saudi Arabia are the top destinations for the data center market in the Middle East region. Gulf Data Hub and Khazna Data Centers are among the top colocation operators investing in the market.

APAC Region

• The APAC region is among the world's most dynamic and fastest-growing data center markets. The region has established and developed markets such as China, Australia, Japan, and Singapore.
• India is likely to be among the top destinations for the data center market in the APAC region owing to the deployment of 5G and the surge in internet & social media penetration aided by several digitalization initiatives.

VENDOR LANDSCAPE

Data Center IT Infrastructure Providers

• Vendors such as Arista Networks, Cisco Systems, Dell Technologies, Hewlett Packard Enterprise, IBM, Huawei Technologies, NetApp, Lenovo, and others are among the top IT infrastructure providers in the global data center market.
• The IT infrastructure market has changed over the last few years, with the increased construction of self-built data centers by hyperscale operators and expansions and new projects by colocation operators.

Data Center Support Infrastructure Providers

• Vendors such as Schneider Electric, Rittal, Hewlett Packard Enterprise, and Delta Power Solutions provide infrastructure based on OCP design in the global data center market. This will aid in market revenue growth for these vendors, as many organizations prefer solutions such as 48V DC UPS systems.

Data Center Construction Contractors

• The surge in data center activities worldwide will be a major source of revenue for construction contractors. Some prominent construction contractors include AECOM, Arup, Corgan, DPR Construction, Fortis Construction, Holder Construction, Jacobs, Turner Construction, Syska Hennessy Group, RED Engineering, and Turner & Townsend.

Data Center Investors/Operators

• The major hyperscale operators investing in the data center market include Amazon Web Services (AWS), Microsoft, Meta (Facebook), and Google.
• The major colocation operators that are active in the data center market include Equinix, Digital Realty, Switch, QTS Realty Trust, Iron Mountain, DataBank, Vantage Data Centers, CyrusOne, NTT Global Data Centers, Compass Datacenters, and others.

KEY QUESTIONS ANSWERED:

1. How big is the data center market worldwide?
2. What is the growth rate of the global data center market?
3. What is the estimated market size in terms of area in the global data center market by 2028?
4. What are the key trends in the data center market?
5. How many MW of power capacity is expected to reach the global data center market by 2028?