Executive Summary
The infrastructure services market in APAC continues to move forward amid shifting currents in the landscape that increasingly look favourable. Macroeconomic conditions have improved and enterprise decision-making has shifted away from cutting costs and retrenchment to being more strategic and success-oriented. Meanwhile, AI is coming to the region and the recent revelations around the DeepSeek training model is laying the foundation for a wave of innovation and optimisation that should accelerate overall adoption. Affordability is a prerequisite for end user uptake, and only with widespread usage can infrastructure consumption start to accelerate. The innovation around DeepSeek has caused some consternation and uncertainty across the sector, but will end up having a positive impact on the entire infrastructure ecosystem.
The Chinese clouds have always been an important piece of the puzzle. Performance in the last several years has been weak and this has negatively impacted hyperscale cloud and data centre colocation growth. Things have definitely started to turn the corner as the sector moves into 2025. Growth is up and AI services have been a key driver. This is not a short-term blip, but the starting point for a long period of growth and development. And the CapEx investments being made speak volumes. The Chinese clouds are doubling down on AI and the data centre colocation market will benefit from the infrastructure that is going to be built. The Chinese clouds are recovering, but there are also new entrants coming to compete for this massive addressable market. ByteDance’s new public cloud infrastructure service is building out its footprint and value is flowing into the infrastructure services ecosystem.
While China is an important variable, there are other markets set to take off. India has seen significant land banking and expansion activity, while new markets like Thailand and Taiwan are attracting significant levels of investment as hyperscale lands within early-stage markets that have somewhat limited hyperscale inventory and operating expertise.
As the sector moves further into 2025, AI will continue to be the story. The pace and volume of AI expansion will determine how fast the sector can tap into its long-term upside potential. It will, of course, not play out in a straight line. Geopolitical tensions continue to be present and interfere with the supply chain, while development and procurement timelines may not match up with the pace of emerging demand. It will sort itself over the long-term, but for now things are sure to take a few twists and turns.
This report takes a closer look at the most noteworthy themes and developments that took place in the infrastructure services market in APAC in 4Q24. It is a regional supplement to Structure Research’s other quarterly update reports.
