Executive Summary
The infrastructure services market in APAC continues to push forward in an environment that continues to see headwinds fade and tailwinds emerge. The rebounding performance of the Chinese clouds are a big reason why growth rates have started to accelerate and demand for data centre colocation is improving. At the same time, the rise of AI has sparked a wave of GPU cloud provider formation that is building out infrastructure as fast as possible, while putting pressure on the hyperscalers to build similar offerings. All this has translated into elevated demand for compute and data centre infrastructure.
But just as the sector seems to be entering a period of unprecedented growth, there are challenges emerging. The geopolitical environment is increasingly volatile and global trade wars are threatening to disrupt supply chains. Meanwhile, resource constraints are becoming more pronounced just as hyperscalers and data centre operators are extending planning horizons, engaging in aggressive land and energy banking, and increasing the scale and scope of what they are building. In some cases, this is being done by orders of magnitude greater than what was done not that long ago.
The long-term upside and potential of the sector remains in place and continues to attract significant inventor interest that shows no signs of slowing down. There was strategic M&A in the recent quarter, especially in Australia, and operating platforms are actively raising debt and equity to support expansion plans. Needless to say, the expectation is that demand will continue to be healthy and more inventory will need to be built.
But not everyone agrees. And in the early part of the year, some bearish sentiment emerged in the wake of the DeepSeek revelations and the news that all three major US-based hyperscalers recently pulled back from infrastructure resource options and commitments, with some of this happening in APAC. The reason this occurred, so the argument goes, is that AI demand is overblown or worse, is an impending bubble, and the capacity requirements it will need are nowhere near what is being projected, planned and built for. And because of this, an overbuild situation is about to emerge. Simply put, the bears have it wrong. The recent pullbacks from hyperscalers were just about routine capacity management, while DeepSeek is actually a good thing for the sector and reflects the natural course of optimisation and incremental efficiency gains that always happens with new technologies and infrastructure management. The more efficient the technology becomes, the more adoption and infrastructure consumption will follow.
This report takes a closer look at the most noteworthy themes and developments that took place in the infrastructure services market in APAC in 1Q25. It is a regional supplement to Structure Research’s other quarterly update reports.
