Malaysia Data Center Market Analysis - Size and Forecast 2025-2029

Malaysia Data Center Market Size 2025-2029

The Malaysia data center market size is forecast to increase by USD 6.24 billion at a CAGR of 22.7% between 2024 and 2029.

• The market is experiencing significant growth, driven by key factors such as the increasing demand for data center expansion and planning by hyperscalers. Another trend shaping the market is the shift toward large facilities to accommodate the growing need for data processing and storage. However, this growth comes with challenges, including the high capital investment required to build and maintain these facilities. Effective demand planning and strategic expansion are essential for businesses to remain competitive In the market. Additionally, advancements in technology, such as edge computing and the Internet of Things (IoT), are creating new opportunities for data center providers. Overall, the market is poised for continued growth, with businesses and organizations increasingly relying on data-driven insights to fuel innovation and growth.

What will be the Size of the market During the Forecast Period?

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• The market is experiencing significant growth due to the increasing digitalization penetration and the rising adoption of cloud computing. According to industry reports, the global market size is anticipated to reach substantial revenues by 2026, growing at a CAGR of over 10% during the forecast period. Data center operators continue to seek strategic locations, such as industrial estates, free zones, connectivity hubs in port cities, and proximity to submarine cables, to establish their facilities. Renewable energy generation is also becoming a priority for operators to reduce their carbon footprint and lower operational costs.
• Cloud service providers are investing heavily in IT infrastructure, including servers, storage systems, network infrastructure, electrical infrastructure, UPS systems, generators, switches and switchgears, mechanical infrastructure, cooling systems, and AI and big data technologies. Colocation, managed hosting, and cloud services are popular offerings In the market, with consultants playing a crucial role in guiding organizations In their digital transformation journeys. Racks, chiller units, and other essential components are in high demand as data center construction and expansion continue. IoT and other emerging technologies are also driving the need for advanced solutions. Overall, the market is a dynamic and evolving landscape, with continued innovation and growth expected In the coming years.

How is this market segmented and which is the largest segment?

The market research report provides comprehensive data (region-wise segment analysis), with forecasts and estimates in "USD billion" for the period 2025-2029, as well as historical data from 2019-2023 for the following segments.

• Type
  • Data center servers
  • Data center storage
  • Data center powering and cooling solutions
  • Data center networking solutions
• End-user
  • BFSI
  • Cloud
  • E-commerce
  • Government
  • Others
• Environment
  • Hyperscale
  • Colocation
  • Edge
  • Others
• Variant
  • Tier 3
  • Tier 1 and Tier 2
  • Tier 4
• Geography
  • Malaysia

By Type Insights

• The data center servers segment is estimated to witness significant growth during the forecast period.

Data centers serve as critical infrastructure for processing, storing, and running applications, utilizing servers, storage systems, network infrastructure, electrical infrastructure, UPS systems, generators, switches and switchgears, mechanical infrastructure, cooling systems, racks, chiller units, and general construction. Enterprises and operators are transitioning from capital expenditure (CAPEX) to operational expenditure (OPEX) models to optimize server infrastructure utilization and reduce costs. This shift drives demand for consolidation, virtualization, and containerization of computing needs. Servers in data centers include rack servers, blade servers, tower servers, microservers, and Open Compute Project (OCP) servers. The digitalization penetration and cloud computing trends have increased the adoption of AI, big data, IoT, 5G connectivity, and telecom operators, necessitating low latency and edge data centers.

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Market Dynamics

Our market researchers analyzed the data with 2024 as the base year, along with the key drivers, trends, and challenges. A holistic analysis of drivers will help companies refine their marketing strategies to gain a competitive advantage.

What are the key market drivers leading to the rise in adoption of Malaysia Data Center Market?

Demand planning and expansion by hyperscalers is the key driver of the market.

• The market is experiencing growth due to rising investments in new data center construction and capacity expansions by hyperscalers. Hyperscalers, known for their massive computing capabilities, are increasingly choosing Malaysia as a location for their elastic cloud platforms. For instance, in late 2024, Bridge Data Centres (BDC) signed an Electricity Supply Agreement (ESA) with Tenaga Nasional Berhad (TNB), Malaysia's leading energy solutions provider. This agreement underscores the growing importance of data centers in Malaysia's digitalization penetration. Cloud computing is another significant driver of the market's growth. Cloud service providers are expanding their presence in Malaysia to cater to the increasing demand for cloud services.
• This expansion is leading to the development of advanced network infrastructure, including connectivity through submarine cables and 5G networks, and the adoption of AI, Big Data, IoT, and other emerging technologies. The operators are also investing in renewable energy generation to reduce their carbon footprint and lower operational costs. Industrial estates, free zones, and port cities are popular locations for data centers due to their access to power production and connectivity. Mechanical infrastructure, including cooling systems, racks, and chiller units, is a crucial component of data centers, along with electrical infrastructure, such as UPS systems, generators, switches, and switchgears.

What are the market trends shaping the Malaysia Data Center Market?

A shift toward large data center facilities is the upcoming trend In the market.

• In South-East Asia, there is a growing trend towards large-scale, multistoried data center facilities due to land scarcity and escalating land acquisition costs. Colocation service providers and cloud service providers (CSPs) are increasingly building larger data centers with expansive gross floor areas, some even planning 150 MW facilities. These facilities will house a greater number of storage and computing resources, enabling them to cater to a larger clientele than smaller data centers. Moreover, the digitalization penetration in South-East Asia is fueling the demand for advanced infrastructure. Cloud computing, AI, big data, IoT, and 5G connectivity are driving the adoption of cloud services, necessitating the need for strong network infrastructure, electrical infrastructure, and cooling systems.
• Data center operators are also prioritizing renewable energy generation as part of their sustainability initiatives. Industrial estates, free zones, and port cities are attractive locations due to their connectivity to submarine cables and proximity to telecom operators. The market dynamics include the integration of mechanical infrastructure, such as UPS systems, generators, switches and switchgears, and cooling systems, including chillers, cooling towers, and racks. General construction and physical security are essential components of data center design, adhering to tier standards for IT infrastructure.

What challenges does Malaysia Data Center Market face during the growth?

Need for high capital investment is a key challenge affecting the market growth.

• Data centers play a pivotal role In the digitalization penetration of businesses, particularly with the increasing adoption of cloud computing. In Malaysia, the operators are under pressure to adhere to tight timelines and reduce costs per MW to remain competitive. However, challenges such as government inactions, public opposition, financing difficulties, weather conditions, industrial accidents, and labor disruptions can cause significant delays in data center development. To mitigate these challenges, data center facilities are being constructed in strategic locations such as industrial estates, free zones, connectivity hubs like port cities, and near submarine cable landing stations for optimal connectivity.
• Renewable energy generation is also a priority for many data center operators, with power production from renewable sources becoming increasingly important for sustainability and cost savings. Cloud service providers require reliable electrical infrastructure, including UPS systems, generators, switches, and switchgears, as well as mechanical infrastructure such as cooling systems, racks, chiller units, and cooling towers. General construction and physical security are also essential components of the design. The Tier Standard for IT infrastructure is a widely recognized benchmark for assessing a data center's ability to provide uninterrupted power and cooling to its IT equipment. The adoption of AI, big data, IoT, and 5G connectivity is driving the need for low latency and edge data centers, creating new opportunities for telecom operators and ICT services providers.

Exclusive Customer Landscape

The market forecasting report includes the adoption lifecycle of the market, covering from the innovator's stage to the laggard's stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the market report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their market growth analysis strategies.

Customer Landscape

Key Companies & Market Insights

Companies are implementing various strategies, such as strategic alliances, market forecast , partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence In the market.

Cisco Systems Inc. - The company offers data center solutions such as Cisco application centric infrastructure, Cisco data center manager and Cisco Hyperflex.

The market research and growth report includes detailed analyses of the competitive landscape of the market and information about key companies, including:

• Amazon.com Inc.
• Bridge Data Centres
• Cummins Inc.
• Cyxtera Technologies Inc.
• Dell Technologies Inc.
• DXC Technology Co.
• Eaton Corp. plc
• Equinix Inc.
• Fujitsu Ltd.
• GDS Holdings Ltd.
• Google LLC
• Hewlett Packard Enterprise Co.
• Huawei Technologies Co. Ltd.
• International Business Machines Corp.
• Legrand SA
• Lenovo Group Ltd.
• Microsoft Corp.
• NEC Corp.
• NetApp Inc.
• Nippon Telegraph and Telephone Corp.
• Schneider Electric SE
• Vertiv Holdings Co.

Qualitative and quantitative analysis of companies has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize companies as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize companies as dominant, leading, strong, tentative, and weak.

Research Analyst Overview

The digitalization penetration in various industries continues to drive the demand for strong and efficient data center solutions. These facilities play a crucial role in supporting the increasing adoption of cloud computing, which enables businesses to store, manage, and process their data remotely. Data center operators seek to establish their presence in strategic locations to optimize connectivity and reduce latency. Industrial estates and free zones, with their infrastructure-rich environments, have emerged as popular choices for these operators. Additionally, port cities offer proximity to submarine cables, providing high-speed data transfer capabilities. The network and electrical infrastructure of data centers are essential components, ensuring seamless communication between servers, storage systems, and other IT infrastructure.

In addition, UPS systems, generators, switches, and switchgears, mechanical infrastructure, cooling systems, racks, chiller units, and general construction are all integral parts of a well-designed data center. Cooling systems, a critical aspect of the design, are evolving to incorporate renewable energy sources, such as cooling towers and chiller units, to minimize the environmental impact of these facilities. Furthermore, the integration of renewable energy power production is becoming increasingly important for data centers, contributing to their overall sustainability. The importance of physical security in data centers cannot be overstated. Tier standard certifications ensure that data centers meet specific security requirements, safeguarding IT infrastructure from potential threats.

Furthermore, cloud service providers are continually expanding their offerings to cater to diverse business needs. AI, big data, IoT, and 5G connectivity are among the latest trends driving innovation In the cloud services market. Telecom operators are also investing in edge data centers to provide low latency services, further enhancing the value proposition of cloud services. The banking and finance sector, among others, relies heavily on IT infrastructure for their operations. Data center consultants play a vital role in guiding businesses through the complex process of selecting, designing, and implementing data center solutions. Governments and economic transformation programs are recognizing the importance of data centers in driving economic growth and are investing In their development.

Moreover, business services, including colocation, managed hosting, and ICT services, are all benefiting from the growing demand for the solutions. Renewable energy, power production, disaster relief centers, and telecom operators are some of the industries that can significantly benefit from data centers. The integration of these sectors with data centers can lead to synergies and new opportunities, ultimately contributing to the overall growth of the digital economy.

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What are the Key Data Covered in this Market Research and Growth Report?

• CAGR of the market during the forecast period
• Detailed information on factors that will drive the market growth and forecasting between 2025 and 2029
• Precise estimation of the size of the market and its contribution of the market in focus to the parent market
• Accurate predictions about upcoming market growth and trends and changes in consumer behaviour
• Growth of the market across Malaysia
• Thorough analysis of the market's competitive landscape and detailed information about companies
• Comprehensive analysis of factors that will challenge the growth of market companies

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