Alphabet's Google is reportedly contemplating the construction of a substantial data center in Vietnam, marking a potential first for a major U.S. tech company in the Southeast Asian country, according to a source familiar with the matter. Google is considering establishing a "hyperscale" data center near Ho Chi Minh City, the economic heart of southern Vietnam, the source revealed, preferring anonymity due to the sensitive nature of the information. The exact scale of the investment remains unspecified, but it would significantly bolster Vietnam's efforts to attract significant foreign capital for data centers, a sector hindered by inconsistent infrastructure. While the timeline for a decision is unclear, internal discussions are underway, with the possibility of the data center being operational by 2027. Google has not provided any official comments on the proposed data center.
Hyperscale data centers are among the largest in the industry, often consuming energy equivalent to that of a large city. Estimates suggest that a hyperscale data center with a 50 megawatts (MW) power capacity could range in cost from $300 million to $650 million, based on data from a recent Jones Lang LaSalle report on Vietnam's data center market. The decision to invest is driven by Google's extensive client base in Vietnam for both domestic and international cloud services, as well as the rapid growth of the country's digital economy. Notably, Vietnam is one of the fastest-growing markets for YouTube, Google's popular video platform. Currently, the leading data center operators in Vietnam are state-owned enterprises IDC Becamex and VNPT, according to a market report from a local industrial park.
Despite the growing demand for digital services among Vietnam's population of 100 million, foreign investors have been hesitant due to occasional power shortages, less favorable investment incentives, and inadequate internet infrastructure supported by aging subsea cables. In contrast, neighboring countries like Singapore, Malaysia, and Thailand have attracted much larger investments from global tech giants. Google announced in May a $2 billion investment in Malaysia for its first data center and Google Cloud region. Regulatory challenges, including unattractive foreign ownership and data localization rules, have also been a barrier. However, recent reforms allow overseas data center operators full ownership. Vietnam's stringent cybersecurity laws have historically conflicted with foreign tech companies over data storage requirements, which are inconsistently enforced. Regardless, Google is proceeding with plans to open a representative office in Vietnam and is actively recruiting engineers, marketing experts, and other professionals.
Google is also contributing to Vietnam's digital transformation by offering 40,000 scholarships for basic AI courses and $350,000 each to 20 selected AI startups, according to Google Vietnam's Managing Director, Marc Woo. Additionally, Google has a robust network of suppliers in Vietnam that assemble products like Pixel smartphones.
