September 25-26, 2024 The Wynn Las Vegas, NV More information

Q2 2023: APAC Infrastructure Quarterly Report

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Executive Summary

The infrastructure services market in APAC continues to push forward amid a challenging macroeconomic environment, geopolitical currents and unique regional dynamics. The slowing in public cloud growth has had global ramifications and APAC is not immune. In fact, it has also been faced with the extremely weak performance of the Chinese clouds, which has moderated overall colocation demand and slowed absorption of contracted data centre capacity. There were signs in the recent quarter that things are starting to stabilise, but this is something that will take some time to play out.

AI is a demand driver boosting the sector’s growth prospects. But in APAC, this wave has not yet arrived for the most part. The demand is latent and will take several quarters to start materialising. Meanwhile, self-builds have continued to impact overall demand, with AWS aggressively building on its own in a number of developing markets. Self-building is not pervasive and seems to be limited at this point to AWS and Microsoft Azure.

Despite the many variables in motion, there are still reasons to be optimistic about the region’s long-term prospects as there exist dynamics that uniquely favour the region. Edge-hyperscale deployments are distinctly prevalent in highly dense APAC metros and along with edge nodes are offsetting some of the negative impact of self-building. Also encouraging is the fact that the Chinese clouds remain committed to colocation and are not looking to self-build. APAC is also home to future hyperscalers like ByteDance, which is using colocation at increased levels. Webscale providers are descending on the region and setting up presence in new markets where there are few local options and this opens the door for established operators and capital to aggressively pursue new market opportunities.

This report takes a closer look at the most noteworthy themes and developments that took place in the infrastructure services market in 2Q23. It is a regional supplement to Structure Research’s other quarterly update reports.