Executive Summary
The infrastructure services market in APAC continues to push forward amid a dynamic and constantly changing environment. And as we move from 2024-25, there are plenty of reasons to be optimistic as the sector has reached a unique inflection point with headwinds subsiding and tailwinds emerging at the same time. Macroeconomic conditions, while still uncertain to some degree, have started to improve over the last several quarters, enterprise decision-making has loosened up and investments oriented to growth and expansion are being made.
The Chinese clouds are a significant driver of growth in the region and the last few years have not been great, to say the least. Moving into the post-pandemic environment, the Chinese clouds have gradually started to find solid footing, and in the last few quarters, showed signs of meaningful progress. Growth has restarted and a move up the value chain has paid dividends as the Chinese clouds, like those in the US, have figured out that growth is more about tools and services than it is about standalone raw infrastructure. The demand for GPU-based infrastructure has also sparked uptake that has translated into customer growth and expansion.
Adding more intrigue, the public cloud competitive landscape in APAC is about to get a jolt. Alibaba Cloud had been leading the way for many years, followed by Tencent Cloud and Huawei Cloud, and now ByteDance has moved into the business of cloud infrastructure with the BytePlus offering that is now making its way into markets outside China. BytePlus has already increased the demand profile for data centre colocation and it is just getting started building out its footprint.
As things start to shift in a more favourable direction, there are reasons to believe even stronger tailwinds are emerging. AI is on every enterprise drawing board and the hyperscale platforms are preparing to push the technology into the region. Meanwhile, independent GPU cloud providers are popping up across APAC and US-based providers started to land in the recent quarter. There are going to be initial waves of AI adoption in mature markets like Singapore, Japan and Australia, but there is plenty of upside potential in geographies that have the right combination of resources amenable to large-scale infrastructure development. And it is there where data centre operators will target in a bid to capture value.
This report takes a closer look at the most noteworthy themes and developments that took place in the infrastructure services market in APAC in 3Q24. It is a regional supplement to Structure Research’s other quarterly update reports.
