Vietnam Data Center Construction Market Size

Vietnam Data Center Construction Market Analysis

The Vietnam data center construction market is projected to register a CAGR of 8.84%. The rising number of smartphone users and growing internet penetration is driving dependence on the cloud, telecom, and E-commerce, resulting in the need for more data center construction.

• Vietnam has 85% of adults using smartphones as of 2022. Vietnam aims to increase this proportion according to its draft National Digital Infrastructure Strategy by 2025. The Telecommunications Department of the Ministry of Information and Communications (MIC) notes that various digital initiatives are considered to push smartphone adoption in the country.
• According to MIC's press release, Hai Phong has the highest percentage of adults using smartphones at 78.4% and Da Nang at 77.8%. The adult smartphone usage rate is 75.7% in Ho Chi Minh City and 74.5% in Hanoi. Correspondingly, the provinces with the lowest percentage of the population using feature phones are Da Nang at 6.3%, Ho Chi Minh City at 7.9%, and Ca Mau at 7.3%.
• Furthermore, the digital economy and social development are top priorities in most development strategies. Local internet service providers (ISPs) in Vietnam plan to develop a cable network in response to frequent network breakdowns on the Asia America Gateway (AAG) submarine telecommunication cable. Thus such infrastructure developments are driving the need for a data center in the country.
• Environmental, cost and workforce-related challenges could restrain the Veitnamiese data center construction market. The environmental impacts are wide-reaching, impacting climate change, pollution, biodiversity, and natural resources. Though the challenges are broad, they present many opportunities for improvement and long-lasting positive impact. The cost of constructing the data center is also high, which could restrain small and medium enterprises from setting up a new center. The vendor's focus is on the regions that have lower costs for construction.
• Furthermore, the COVID-19 pandemic struck when demand for data center capacity was expanding rapidly, and it applied restrictions to constructing new facilities. There was a specific impact on the market, such as data network traffic increased the traffic by increasing usage of applications such as Zoom and Microsoft Office, among others. Moreover, the pandemic caused challenges in constructing a data center due to disruption in the supply chain, which slowed down the market's growth. However, post-pandemic, the demand for data capacity has more than tripled, and companies are shifting toward a hybrid cloud environment. Hence, the market has seen a resurgence in data center construction.