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Vietnam ramps up data center construction

Vietnam ramps up data center construction

Thursday, January 05, 2023, 15:32 GMT+7
Vietnam ramps up data center construction
A data center in Ho Chi Minh City. Photo: Thu Van / Tuoi Tre

A massive rise in the demand for data storage and the resulting increase in high-quality data centers (DCs) being built to meet that demand have led to Vietnam being named amongst the world’s top 10 emerging markets in the data storage industry.

Both foreign and domestic businesses are looking to cash in on Vietnam’s demand for data storage.

In mid-December of last year, local tech firm VNG Corporation put its 12,400-square-meter VNG Data Center into operation in Ho Chi Minh City.

VNG Data Center currently features 410 server racks, but plans are in place to expand the center’s capacity to 1,600 racks to meet the safe data storage and cloud computing needs of its clients. 

It is one of three DCs in Vietnam that have been awarded a Tier III certification of design documents (TCDD) and constructed facility (TCCF) by Uptime Institute, the world’s most prestigious data center evaluation system.

Vietnam’s Viettel Group has also involved itself in the DC industry.

In October of last year, the military-run corporation launched the Viettel Cloud ecosystem with 13 centers measuring a combined 60,000 square meters and including 9,000 racks.

The group also announced that it would invest an additional VND10 trillion (US$426.5 million) in Viettel Cloud to expand its scale to 17,000 racks by 2025.

Furthermore, in August 2022, CMC Corporation inaugurated a 13,000-square meter, 1,200-rack DC in Ho Chi Minh City. The center cost VND1.5 trillion ($64 million).

In addition to domestic enterprises, several foreign firms have built DCs in Vietnam. 

For example, Japan’s NTT Group in March of last year partnered with Quang Dung Technology Distribution Joint Stock Company, an arm of GREENFEED Vietnam Corporation, to develop a Tier III DC in Ho Chi Minh City.

The center is expected to be put into service in 2024.

Tough competition

According to Huy Nguyen, founder and CEO of KardiaChain and former senior technical director at Google, it is no surprise that Vietnam is attracting domestic and global investors in the DC industry, especially given the sector's massive financial upside.

“My company currently pays a Vietnamese company $50,000 per month for data storage services," Huy Nguyen said.

An expert in the sector told Tuoi Tre (Youth) newspaper that leading global Internet service providers, such as Google, Facebook, and Apple, had installed servers at DCs in Vietnam before the Law on Cyber Security took effect on October 1, 2022.

Pursuant to the law, foreign enterprises providing services in Vietnam must store the data of Vietnamese users locally.

Nevertheless, Huy Nguyen assessed that DCs in Vietnam remain small compared with those operated by large firms in other countries, such as AWS, Google, and Microsoft.

Domestic DCs currently fail to meet local demands as they have been prioritized for state-owned enterprises and firms which are required to store their data in Vietnam.

Due to their small scale, local DC service providers charge high costs compared to companies like AWS, Google, and Microsoft.

“Vietnam’s digital transformation is still in progress, so the country still needs to develop more DCs to meet its demand and eventually dominate the Southeast Asian market,” Huy Nguyen added.

A future regional powerhouse

Vietnam was listed amongst the top 10 emerging markets in the global data center industry in 2021 by ResearchAndMarkets, one of the world’s largest market research organizations.

The Southeast Asian country generated revenue of some $858 million from DCs in 2020. The Vietnamese data center market is projected to post a growth rate of nearly 15 percent per year until 2026.

“The growth rate of the Vietnamese data center market is impressive with its capability to provide services meeting international standards and large enterprises,” according to ResearchAndMarkets.

Domestic enterprises also expect that ‘made-in-Vietnam’ DCs will significantly contribute to the country’s digital economic development.

Tao Duc Thang, chairman and general director of Viettel Group, said it had set a target to provide each Vietnamese citizen, household, organization, and enterprise with a cloud-based data store located in Vietnam and researched, developed, and operated by Vietnamese engineers.

Meanwhile, Nguyen Trung Chinh, chairman and executive president of CMC Corporation, said the launch of its DC in August last year is a milestone in pushing Vietnam toward becoming a digital hub in the Asia-Pacific region.

To date, Vietnam has been home to nearly 30 DCs, with over 46 percent located in the north, 35 percent in the south, and some 18 percent in the central region.

Since 2010, the power volume consumed by DCs in Vietnam has tripled.

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Thanh Ha - Duc Thien / Tuoi Tre News


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