Where is the data centre industry headed?

The advancement of AI is changing the industry.

The data centre industry is projected to see the development of hyperscale and even gigawatt-scale data centres, amidst the acceleration of artificial intelligence (AI).

According to UOB Kay Hian Research’s latest report, smaller data centres, particularly those serving enterprise tenants, could become irrelevant.

The analysis said that the AI revolution changes the industry landscape. The advent of generative AI and large language models has caused a dramatic shift in the data centre landscape.

AI requires high-performance computing with massive parallel processing and vast storage. Training of AI models also consumes an enormous amount of electricity. For instance, a ChatGPT query uses nearly 10x the electricity compared with a Google search.

“High-density server racks of up to 120 kilowatts per rack are becoming standard, necessitating advanced liquid cooling solutions. Thus, AI data centres must be built with added infrastructure to supply large quantities of electricity and water,” the report read.

Hyperscale data centres have a large power capacity of 20 megawatts (MW) to 50 MW and above. Globally, there are more than 500 hyperscale data centres in the planning and construction phases.

Synergy Research expects hyperscale capacity to double every four years, with 130-140 hyperscale data centres added per year.

“Hyperscale data centres provide unmatched efficiency, scalability and cost effectiveness for handling digital workloads. These facilities are optimised for high-density computing, enabling companies to support thousands of servers and petabytes of data with minimal latency,” the report read.

According to the analysis, data centres in Singapore are more suited to mission-critical and low latency applications, such as financial services and AI inference applications. It is a connectivity hub linking Southeast Asia to the global network through its 26 international subsea cables and three cable landing sites.

The city-state eyes at least $10b to expand its international subsea cables capacity and landing sites over the next decade to support the usage of new AI applications.

“The domestic infrastructure will be upgraded to provide broadband speed of 10Gbps over the next five years. The government is working with the private sector and research institutions to scale the usage of autonomous systems using new technology, such as low-earth orbit satellites,” the report read.