Hyperscale Data Center Market - Global Outlook & Forecast 2023-2028

Hyperscale Data Center Market - Global Outlook & Forecast 2023-2028

The global hyperscale data center market was valued at USD 139.11 billion in 2022 and is expected to grow at a CAGR of 5.92% from 2022-2028.

KEY HIGHLIGHTS

• The rise in coverage of 5G and its deployment in various regions will attract more hyperscale data center investment across the countries globally. The use of cloud computing services and applications will continue to grow, leading to the development of large hyperscale cloud-based data centers.
• Governments worldwide offer incentives to attract data center investments in their countries. For instance, in the U.S., states like Virginia and Washington, DC, have seen an increase in data centers due to federal tax incentives. In Latin America, Mexico's special economic zones offer benefits like corporate tax exemptions and import/export tax exemptions. Further, the Netherlands provides tax benefits for sustainable data center investments in the European region, including renewable energy sources, cooling towers, UPS systems, and fans. The Energy Investment Deduction (EIA) program allows for up to 55% tax-free investment cost, while the Environment Investment Deduction (MIA) program can save 13%–36% for eco-friendly data centers.
• Globally, major hyperscale data center market companies are prioritizing using renewable energy as their primary power source. For example, in November 2022, Google entered into a power purchase agreement (PPA) for 942 megawatts of solar power from projects in development in Texas.
• Most operators in the global hyperscale data center market primarily employ free cooling solutions, and there is also a growing trend in data centers toward adopting waterless cooling systems that use free cooling chillers and indoor CRAC units.
• The hyperscale data center market is likely to witness the entry of new players. For instance, Form8tion Data Centers, a new entrant in the European market formed by Thor Equities, commenced the construction of a new data center in Madrid, Spain. The operator claims its facilities will use HVO for generators and renewable energy to power the data center.

SEGMENTATION ANALYSIS

Segmentation by Infrastructure

• IT Infrastructure
• Electrical Infrastructure
• Mechanical Infrastructure
• General Construction

Segmentation by IT Infrastructure

• Server Infrastructure
• Storage Infrastructure
• Network Infrastructure

Segmentation by Electrical Infrastructure

• UPS Systems
• Generators
• Transfer Switches & Switchgear
• PDUs
• Other Electrical Infrastructure

Segmentation by Mechanical Infrastructure

• Cooling Systems
• Racks
• Other Mechanical Infrastructure

Segmentation by Cooling System

• CRAC & CRAH Units
• Chiller Units
• Cooling Towers, Condensers & Dry Coolers
• Economizers & Evaporative Coolers
• Other Cooling Units

Segmentation by Cooling Technique

• Air-based Cooling Technique
• Liquid-based Cooling Technique

Segmentation by General Construction

• Core & Shell Development
• Installation & Commissioning Services
• Engineering & Building Design
• Fire Detection & Suppression
• Physical Security
• DCIM/BMS Solutions

Segmentation by Tier Standards

• Tier I & Tier II
• Tier III
• Tier IV

MARKET TRENDS & OPPORTUNITIES

Rising Procurement of Artificial Intelligence

The growing adoption of artificial intelligence (AI) is significantly increasing the need for hyperscale data centers. AI applications, especially those involving machine learning and deep learning, require extensive computing resources and storage. Hyperscale data centers, known for their vast storage capacity and powerful computing capabilities, provide the optimal infrastructure for efficiently handling the enormous data volumes essential for AI training and processing. Additionally, these data centers can quickly adapt to accommodate the fluctuating workloads associated with AI, playing a pivotal role in supporting the ongoing expansion and success of AI-driven technologies. Also, Google uses AI to save energy in its data centers. AI controls cooling based on temperature and humidity, which has cut energy use by 30%.

Growing Procurement of Big Data and IoT Solutions

Over time, the increase in internet speed and the growing number of users have led to a significant increase in data and the widespread use of social media. Various industries such as healthcare, banking and finance, education, and hospitality are experiencing data growth due to advancements in technology and digital transformation initiatives. For instance, In February 2022, T-Mobile, in partnership with Deutsche Telekom, announced the launch of a new solution, T-IoT, which will provide enterprises with simplified global IoT connectivity.

Automation & Intelligent Monitoring Solutions

Data center automation solutions can identify the maintenance requirements of generator systems to avoid operational failure and backup power failure during outages. The regular maintenance of generators over some time is essential since the diesel inside these systems can become polluted and affect the proper function of the systems when they are required the most. Vendors such as Carrier, Data Aire, and Menerga offer remote monitoring solutions for cooling infrastructure.

Sustainable and Innovative Data Center Technologies

The data center market has seen many changes and improvements over time. Data center operators are working to make their facilities operate more efficiently. They are also upgrading their centers by replacing old technologies with newer ones. Furthermore, operators in the hyperscale data center market are paying more attention to reducing the environmental impact, specifically carbon emissions, from their data centers. For instance, in September 2022, Equinix, in partnership with the National University of Singapore, announced its plan to test hydrogen-powered fuel cells as a source of power for its data centers in Singapore.

GEOGRAPHICAL ANALYSIS

Hyperscale Activity Dominated by North America and APAC Persists

In 2022, North America and APAC witnessed high growth of hyperscale data center investments, collectively accounting for approximately 75% of all projects. North America saw substantial investments from tech giants like Facebook, Google, Microsoft, and AWS, pouring billions of dollars into hyperscale data center development. Meanwhile, in APAC, the surge in the hyperscale data center market was driven by the likes of Alibaba, Tencent, Baidu, Microsoft, ByteDance, AWS, VIVO, China Electronics, IQIYI, China Mobile, Bilibili, and more.

European Hyperscale Growth in Multiple Nations

The hyperscale activity within the FLAP-D (Frankfurt, London, Amsterdam, Paris, and Dublin) market saw significant expansion in 2022, with colocation operators focusing on facilities exceeding 20 MW. Additionally, countries such as Spain, Belgium, Norway, Sweden, Poland, Switzerland, Denmark, and Finland saw a notable uptick in hyperscale data center investments through colocation and self-built facilities. Global and local operators' expansion efforts across Europe have been steadily on the rise.

Hyperscale Expansion Takes Hold in the Middle East

The hyperscale data center market development gained momentum in the Middle East, encompassing countries like Israel, Saudi Arabia, and the UAE. Colocation operators and the entry of global cloud service providers like Google, AWS, and Microsoft fueled this growth.

The Future of Hyperscale Data Centers in Africa

In Africa, South Africa continued to lead the hyperscale data center market in 2022, with investments from operators such as Africa Data Centres, Vantage Data Centers, and Teraco Data Environments (Digital Realty). Other areas, such as Egypt, Kenya, Ethiopia, and Nigeria, are also expected to emerge as the following destinations for hyperscale data center development on the continent.

APAC Set for Higher Hyperscale Investments

The Asia-Pacific (APAC) region is poised for explosive growth in the hyperscale data center market during the forecast period. Notably, Southeast Asia, South Korea, Japan, and India are anticipated to play a pivotal role in this surge. Significant contributors include Australia, India, Japan, China, Hong Kong, Malaysia, Singapore, and Indonesia. Although Singapore lifted its moratorium on data center construction in 2021, the focus of hyperscale investments has shifted to other Southeast Asian countries such as Indonesia, Malaysia, and Thailand. The coming years will witness an uptick in hyperscale activity in markets like Vietnam, the Philippines, and Taiwan, alongside ongoing growth in China, India, Japan, South Korea, Australia, and Hong Kong, driven by capacity expansion efforts by cloud service providers and tech giants.

Segmentation by Geography

• North America
• The U.S.
• Canada
• Latin America
• Chile
• Brazil
• Mexico
• Western Europe
• The U.K.
• Germany
• France
• Netherlands
• Ireland
• Spain
• Other Western European Countries
• Nordics
• Denmark
• Sweden
• Norway
• Finland
• Central & Eastern Europe
• Poland
• Other Central & Eastern European Countries
• Middle East
• UAE
• Saudi Arabia
• Israel
• Africa
• South Africa
• Other African Countries
• APAC
• China
• Hong Kong
• Australia
• New Zealand
• India
• Japan
• South Korea
• Singapore
• Malaysia
• Thailand
• Indonesia
• Philippines

VENDOR LANDSCAPE

Vendors' Advancements and Challenges in the Data Center Market

In response to a growing trend, companies that provide data center infrastructure services are increasingly adopting environmentally friendly and efficient solutions. However, they are facing challenges such as supply chain issues, which are causing delays and higher procurement costs. On the construction side, companies building data centers are having trouble finding skilled workers, so they are focusing more on using recycled materials for big projects. In terms of investments, companies that offer colocation services are partnering with each other through mergers and joint ventures to expand. For example, GDS Services is teaming up with YTL to build data centers in Malaysia. At the same time, major global cloud providers like AWS, Microsoft, and Google are making significant investments in large-scale data centers. They are doing this by building their facilities and renting space from colocation providers in multiple countries. This increase in activity is making the competition among colocation providers in the market more intense.

Key Data Center IT Infrastructure Providers

• Cisco Systems
• Dell Technologies
• Hewlett Packard Enterprise (HPE)
• Huawei Technologies
• IBM
• Inspur

Other Prominent IT Infrastructure Providers

• Arista Networks
• ATOS
• Broadcom
• Juniper Networks
• Lenovo
• NetApp
• Extreme Networks
• Fujitsu
• Hitachi Vantara
• Inventec
• Micron Technology
• Mitac Holdings
• NIMBUS Data
• Oracle
• Pivot3
• Pure Storage
• Quanta Cloud Technology (Quanta Computer)
• Seagate Technology
• Supermicro
• Synology
• Toshiba
• Violin (StorCentric)
• Western Digital
• Wistron (WIWYNN)

Key Data Center Support Infrastructure Providers

• ABB
• Caterpillar
• Cummins
• Delta Electronics
• Eaton
• Legrand
• Rolls-Royce
• Schneider Electric
• STULZ
• Vertiv

Other Data Center Support Infrastructure Providers

• Airedale
• Alfa Laval
• Asetek
• Assa Abloy
• Bloom Energy
• Carrier
• Condair
• Cormant
• Cyber Power Systems
• Daikin Applied
• Data Aire
• Delta Electronics
• EAE
• Enlogic
• FNT Software
• Generac Power Systems
• Green Revolution Cooling (GRC)
• HITEC Power Protection
• Honeywell International
• Johnson Controls
• KOHLER
• KyotoCooling
• Mitsubishi Electric
• Munters
• Nlyte Software (Carrier)
• Natron Energy
• NetZoom
• Panduit
• Piller Power Systems
• Riello Elettronica (Riello UPS)
• Siemens
• Trane (Ingersoll Rand)
• Tripp Lite
• Yanmar (HIMOINSA)
• ZincFive
• 3M

Key Data Center Contractors

• AECOM
• DPR Construction
• Holder Construction
• Jacobs
• M+W Group (Exyte)
• Bouygues Construction
• Mercury

Other Data Center Contractors

• Arup
• Aurecon Group
• BENTHEM CROUWEL ARCHITECTS
• Cap Ingelec
• Corgan
• DAR Group
• Deerns
• DSCO Group
• Edarat Group
• Faithful+Gould
• Fluor Corporation
• Fortis Construction
• Gensler
• Gilbane Building Company
• HDR
• ISG
• Kirby Group Engineering
• KKCG Group
• Laing O'Rourke
• Larsen & Toubro (L&T)
• Linesight
• Mace
• Morrison Hershfield
• Mortenson
• NTT Facilities
• Red
• Royal HaskoningDHV
• Sterling and Wilson (Shapoorji Pallonji Group)
• STO Building Group
• Syska Hennessy Group
• Turner Construction
• Winthrop Engineering and Contracting

Key Data Center Investors

• Apple
• Amazon Web Services (AWS)
• CyrusOne
• Digital Realty
• Equinix
• Facebook (META)
• Google
• Keppel Data Centres
• Microsoft
• NTT Global Data Centers
• ST Telemedia Global Data Centres
• Vantage Data Centers

Other Data Center Investors

• 21Vianet
• Africa Data Centres
• Bharti Airtel (Nxtra Data)
• AirTrunk Operating
• Aligned
• atNorth (Partners Group)
• pl
• Big Data Exchange
• Bridge Data Centres
• Canberra Data Centers
• Chayora
• Chindata
• CloudHQ
• ClusterPower
• Cologix
• Compass Datacenters
• COPT Data Center Solutions
• CoreSite Realty
• DataBank
• DATA4
• DigiPlex (IPI Partners)
• EdgeConneX
• Etisalat
• Flexential
• GDS Services
• Global Switch
• Green Mountain
• Gulf Data Hub
• HostDime
• InterNexa
• Iron Mountain
• IXAfrica
• IXcellerate
• Moro Hub
• NEXTDC
• ODATA
• Ooredoo
• Orange Business Services
• Paratus Namibia
• QTS Realty Trust
• Raxio Group
• Rostelecom Data Centers
• Scala Data Centers
• Sify Technologies
• SUNeVision (iAdvantage)
• Tenglong Holdings Group
• Telecom Egypt
• T5 Data Centers
• Turkcell
• Wingu
• Yondr
• Yotta Infrastructure Solutions

New Data Center Investors

• AdaniConneX
• Cirrus Data Solutions
• Data Center First
• Hickory Group
• Global Technical Realty
• Kevlinx
• Novva
• Quantum Loophole
• Stratus DC Management

KEY QUESTIONS ANSWERED:

1. How big is the hyperscale data center market?

2. What is the growth rate of the global hyperscale data center market?

3. What is the estimated market size in terms of area in the global hyperscale data center market by 2028?

4. Who are the key IT infrastructure providers in the global hyperscale data center market?

5. How many MW of power capacity is expected to reach the global hyperscale data center market by 2028?