Alphabet’s Google is contemplating the construction of a massive data centre in Vietnam, which would mark the first major investment by a prominent U.S. technology company in the Southeast Asian nation. The proposed location for this “hyperscale” data centre is near Ho Chi Minh City, Vietnam’s main economic center. The investment, whose precise size remains undisclosed, could significantly benefit Vietnam, a country that has struggled to attract substantial overseas investment in data centres due to its unreliable infrastructure. Large tech firms typically choose neighbor nations for such facilities. The timeline for Google’s decision remains uncertain, but internal discussions are ongoing, with the data center potentially operational by 2027.
Hyperscale data centers, which consume power akin to that of a sizable metropolitan area, have a high cost associated with them. Estimated figures suggest that a hyperscale data center with a 50 MW power consumption capacity could range between $300 million to $650 million. The shift by Google towards setting up this facility in Vietnam is primarily fueled by the expanding digital economy and the fast-paced growth of YouTube, one of Google’s leading online platforms, in the country. Currently, the major data center operators in Vietnam are IDC Becamex and VNPT, two state-owned Vietnamese enterprises. The possibility of a data center investment in Vietnam by Chinese e-commerce giant Alibaba has also been reported.
Foreign investors have been hesitant to venture into Vietnam’s digital sector due to issues like power shortages, less appealing investment incentives, and an inadequate internet infrastructure dependent on a small number of outdated subsea cables. In comparison, countries like Singapore, Malaysia, and Thailand in Southeast Asia have received substantial investments from global technology corporations. Despite these challenges, Google’s commitment to establishing a presence in Vietnam is strengthened by the relaxing of regulations on foreign ownership and data localization, enabling overseas data center operators to maintain full ownership.
To support its business growth in Vietnam, Google is expanding its workforce in the country and is actively recruiting engineers and marketing professionals for its operations. The company is also investing in educational initiatives, offering scholarships for AI courses and funding for selected AI start-ups. Additionally, Google already collaborates with numerous suppliers in Vietnam for the assembly of its products, such as Pixel smartphones. The company’s strategic approach aligns with its broader expansion plans, which include a recent $2 billion investment in Malaysia for the development of a data center and Google Cloud region.
Vietnam’s strict cybersecurity regulations and past disagreements with foreign tech companies over data storage requirements have posed challenges in the past. However, Google’s decision to establish a representative office in Vietnam and its investment in the local workforce demonstrate its commitment to overcoming these obstacles. The country’s digital transformation is a key focus for Google, with efforts aimed at better serving local customers and fostering technological innovation. As Vietnam’s digital landscape evolves, Google’s entry into the market signifies a significant milestone in the country’s tech industry and promises to drive further growth and development in the region.
