South America Data Center Market SIZE & SHARE ANALYSIS - GROWTH TRENDS & FORECASTS UP TO 2029

South America Data Center Market SIZE & SHARE ANALYSIS - GROWTH TRENDS & FORECASTS UP TO 2029

The South America Data Center Market is projected to register a CAGR of 11.99%

Key Highlights

• IT Load Capacity: The IT load capacity of the data center market will have steady growth and is expected to reach 1,806.4 MW by 2029.
• Raised Floor Space: The total raised floor area of the country is expected to increase to 7.8 million sq. ft by 2029.
• Installed Racks: The total number of installed racks is expected to reach 392,072 units by 2029. Brazil is expected to house the maximum number of racks by 2029.
• DC Facilities: There are 178 colocation data center facilities in South America, with Brazil accounting for the highest share. The development of fiber connectivity, increasing reliability in power supply, and high demand for data center services from end users are increasing the DC construction in the developed and developing regions.
• Leading Market Player: Ascenty (Digital Realty Trust Inc.) holds the highest market share of 27.47% compared to its other competitors in the data center market. The company currently operates at an IT load capacity of 185.37 MW and is expected to increase its capacity during the forecast period.

South America Data Center Market Trends

Tier 3 is the largest Tier Type

• The Tier 3 segment currently has a majority share in the South American market due to the major advantage of its features. This tier type has a high redundancy level and multiple paths for power and cooling. These data centers have an uptime of around 99.982%, translating into a downtime of 1.6 hours per year. With the increasing adoption of edge and cloud connectivity, the growth in the Tier 3 segment is expected to increase further.
• Brazil hosts the maximum number of Tier 3 data centers in the region. In 2022, 58 data centers in Brazil had Tier 3 certification. In 2022, Sao Paulo hosted the maximum number of Tier 3 data centers in the country, with a market share of 77.9% and Rio de Janeiro with 27.2%. Among other hotspots (Ceara, Cascavel, Curitiba, Ribeirao Preto, and others), the share was 14.8%. The Tier 3 segment is expected to grow from 649 MW in 2023 to 987.67 MW in 2029, at a projected CAGR of 7.25%.
• The Tier 4 segment is expected to record the highest CAGR of 20.94% during the forecast period. Various developed countries, such as Brazil, are focusing on adopting the Tier 4 certification to be completely fault-tolerant and redundant for every component. This is the major reason why even the developing regions are adopting the Tier 4 type. Major players in the market are expected to expand their facilities, which include Scala Data Centers (366 MW) with 17 facilities and ODATA (24 MW) with one facility during the forecast period.
• The Tier 1 & 2 segment is expected to showcase significant growth in developing countries, with a low GDP rate index in under-developed countries with a high expense burden. These countries include Bolivia, Paraguay, Suriname, and Ecuador, which have the majority of SMEs that cannot afford Tier 3 and 4 facilities.

Brazil is the largest Country

• Brazil and Chile hold the largest shares in the South American data center market. The Brazilian government provides incentives through the Regime Especial de Tributação do Programa Nacional de Banda Larga (REPNBL) program, which includes incentives for purchasing infrastructure that help improve colocation services in the country. Brazil has witnessed an absolute growth of 40% in investments from the 2021 values due to investments from colocation providers such as Ascenty, Scala Data Centers, and ODATA and telecom operators such as GlobeNet Telecom, Ava Telecom, and Embratel. Sao Paulo, Brazil's significant financial capital, serves as the primary data center hub. Other cities, such as Rio de Janeiro and Fortaleza, are major investment locations in Brazil.
• Chile has competitive energy prices, primarily fueled by plans to take advantage of its natural renewable energy generation potential over the coming years. Energy costs have dropped to one-third of what they were five years ago, mainly based on renewable energy that now makes up 46% of the total produced. Chile traditionally has some of the region's best telecommunications infrastructure, and two major fiber projects are underway to ensure it will have a fully redundant fiber backbone. These include the state-funded Fibra Optica Austral (FOA) submarine cable connecting the deep south and Gtd's 3,500 km north-south submarine cable. In 2022, colocation operators, such as Scala Data Centers, ODATA, Ascenty (Digital Realty), and EdgeConneX, were the major investors in the Chilean data center market.
• In Argentina, Buenos Aires is the major investment destination, with the identified third-party facilities in the city contributing to over 90% of the existing power capacity. Most existing data centers are smaller facilities built over a limited area. The International Renewable Energy Agency (IRENA) stated that renewable energy contributed to around 33% of the overall electricity capacity in 2020 in Argentina, and the country aims to generate 20% of the electricity via renewable sources by 2025. The country aims to be one of the largest data center hubs in the coming time period.

South America Data Center Industry Overview

The South America Data Center Market is moderately consolidated, with the top five companies occupying 63.89%. The major players in this market are Ascenty (Digital Realty Trust, Inc.), EdgeUno, INC., Equinix, Inc., ODATA (Patria Investments Ltd.) and Scala Data Centers (sorted alphabetically).

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