Market Trends of Vietnam Data Center Networking Industry
IT & Telecommunication Segment Holds Major Share in the Market.
- Following the global trend of cloud technology, the interest of Vietnamese companies and their demand for cloud services are also increasing. Service provider opportunities in IT services include IT technical training and IT consulting, management, software/enterprise applications (ERP and CRM systems, financial and accounting software), data centers and data storage, and web services.
- The country's data center market is driven by the migration of enterprise data to cloud platforms. For instance, in December 2022, Vietnamese conglomerate Vingroup announced its plans to migrate its SAP (systems, applications, and products) systems, including supply chain management, enterprise resource planning (ERP), finance management, human capital management (HCM), and manufacturing operations, in its on-premise data centers to Google Cloud to boost its production capabilities and improve product and service quality. Such developments are expected to increase the adoption of data storage solutions and positively impact the market.
- The telecom segment also witnessed significant growth of 5.48% during the study period. Many telecom operators aim to increase their offerings and expand their presence nationwide amid the growing internet users and economy. For instance, Viettel IDC plans to invest in 4G and 5G infrastructure and fiber optic connectivity for every household by 2025.
- In 2022, the launch of the 5G network and Viettel revolutionized the digital market of the country. Vietnam has plans to increase its share of the digital economy's gross domestic product (GDP) to 20% by 2025. Vietnam enjoys 99.8% 4G coverage nationwide, with three major carriers, Viettel, VNPT (Vietnam Posts and Telecommunications Group), and MobiFone, successfully piloting 5G technology in 16 cities and provinces. Such developments are expected to increase the adoption of data storage solutions and positively impact market growth.
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Ethernet Switches Holds Largest Market Share
- Datacenter Ethernet switches are network devices that operate in a data center environment. In order to facilitate the efficiency and rapid transfer of data, they play an essential role in establishing interconnection between servers, storage devices, or other network equipment at a data center. Switches are designed for high-speed data transmission with support for gigabit and multigigabit Ethernet, including 10 GbE, 25 GbE, 40 GbE, 100 GbE, and beyond.
- Data centers throughout Vietnam use an extensive network of Ethernet switches. As businesses in Vietnam grow and need more processing capacity, Scalable Ethernet switches enable data center infrastructure to expand. This scalability is essential to accommodate the growing demands of digital services.
- The need for strong data center infrastructure is growing due to Vietnam's business transformation, which demands the storage, processing, and analysis of massive amounts of Digital Data. This also covers cloud services, big data analysis, and technologies such as artificial intelligence and the Internet of Things.
- The demand for advanced data center infrastructure is supported by government initiatives promoting the digital economy and eGovernment services. In June 2021, the Deputy Minister of Information and Communications proposed to the Prime Minister to develop a strategy to transform the government into a digital government from 2021 to 2025, with a vision for 2030.
- The deployment of 5G networks, Internet penetration (reached 79.1% by the start of 2023 from 73.2% during the same period in 2022), and e-commerce sales across the country may boost the region's digital economy and lead to higher demand for high-bandwidth networking infrastructure. 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 developments are expected to increase the adoption of data storage solutions and positively impact the segment growth.
- The key players in the market focus on updating the network devices to meet the market demand. In July 2023, Broadcom introduced a new software-programmable Trident 4-X7 Ethernet switch ASIC to support the growing need for 400G connectivity inside enterprise data centers as demand for increasing bandwidth levels increases.
