Market Trends of Vietnam Data Center Construction Industry
Tier 3 is the Largest Tier Type
- The growth in uninterrupted business services is causing Tier 1 & 2 facilities to lose demand. A growing number of global companies are creating business continuity services and shifting priority to tier 3 data centers.
- The tier 3 sector in the Vietnamese data center market reached an IT load capacity of 128.5 MW in 2022. It is expected to register a CAGR of 1.94% to reach 146.5 MW by 2029. There is an increased investment in data center infrastructure and technological advancements. It is expected to create lucrative opportunities for market growth in 2029.
- Online entertainment, such as video and music streaming and games, was another activity gaining momentum among internet users across Vietnam. In rural areas, video and movie streaming has been one of the major daily online activities in recent years. YouTube was the most popular movie streaming platform. These services need data center facilities with minimum downtime and 24/7 support, which tier 3 facilities can offer.
- In 2021, 22% of people were estimated to use the internet for more than 9 hours a day for studying, entertainment, and shopping, predominantly on their smartphones. Vietnam had 77.93 million internet users in January 2023. The number of users increased by 5.3 million (+7.3%) between 2022 and 2023.
- The Vietnamese market is nascent for tier 4 facilities since it has many infrastructural inefficiencies and hiccups. Hence, as per analysis, the market has not witnessed any developments for the highest tier-based facilities.
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IT and Telecom is Expected to Hold Significant Market Share
- The telecommunications industry is looking toward institutionalization to supervise and promote digital transformation, making the process a foundation for developing the digital economy and society. The Vietnam Radio and Electronics Association suggested that 80% of Vietnamese data are created abroad. The country is taking necessary measures to produce data in Vietnam and aims to generate revenues from the national data infrastructure, which may account for 1% of the GDP by 2025.
- The telecom segment of the Vietnamese data center market reached an IT load capacity of 14.04 MW in 2022. It is expected to record a CAGR of 9.57% to reach a capacity of 26.62 MW by 2029. The segment is expected to hold a market share of 14.5% by the end of the forecast period.
- The deployment of 5G networks may boost the region's digital economy and lead to higher demand for high-bandwidth networking infrastructure. For instance, in November 2021, Amazon Web Services (AWS) announced AWS outposts in Vietnam. Telecommunication services increased by 0.3% from 2020. The telecom segment has seen a drop in data prices since 2018, causing a double or triple growth in data traffic.
- In May 2022, Vietnam Posts and Telecommunications Group (VNPT), a leading provider of digital and telecommunications services in Vietnam, and Casa Systems, a leading provider of physical and cloud-native infrastructure technology solutions for mobile, cable, and fixed networks, signed an MoU to explore 5G capabilities and pave the way for next-generation network services in Vietnam. Such initiatives are expected to drive the telecom segment of the Vietnamese data center market in the coming years.
