Fueling investments in Philippine data centers

According to a report published by DataReportal, in partnership with Meltwater and We Are Social, the worldwide internet adoption reached 66.2% last January, marking a 0.9% increase over the previous year. The total number of social media user accounts, on the other hand, reached 5.04 billion, representing a 5.6% increase from the same period in the previous year.

This rapid proliferation of technology globally has led to the surge in the generation, collection, and utilization of data. Data, in its various forms, has become the foundation of technological innovation, allowing businesses, governments, and individuals to make informed decisions, improve efficiency, and create personalized experiences.

Often referred to as the “new oil,” data is driving technological advancements with its value. According to a report by the International Data Corp. (IDC), the global datasphere is expected to reach 163 zettabytes in 2025, ten times the level in 2016. To put this into perspective, one zettabyte equals a trillion gigabytes.

As a result, the digitalization has led to a surge in investments in data centers, as businesses and consumers generate vast amounts of data that requires secure storage and processing. In fact, a report from law firm Baker McKenzie mentioned that data centers are now a critical piece of digital infrastructure, forming the backbone of the technologies we use daily.

The country’s emerging investment magnet

Filipino internet users, according to DataReportal, exceed the global average in user engagement in online activities. In fact, the Philippines ranked first among 53 countries in terms of online music video consumption, second in online gaming, and second in watching educational videos.

The report also indicated that 73.4% of the total population in the Philippines were active social media users. Filipino social media users are also recognized as the fourth most engaged users, dedicating 40.2% of their internet time to social media platforms, exceeding the global average in social media usage.

Because of these figures, the country is experiencing significant growth in its data center market, with an estimated size of 497.18 megawatts (MW) in 2024, expected to reach 954.22 MW by 2029 at a compound annual growth rate (CAGR) of 13.93%, according to Mordor Intelligence. The market size is also poised to grow from USD 191.62 million this year to USD 447.5 million by 2029, with CAGR of 18.5% during the same period.

The information technology (IT) load capacity in the country, which refers to the energy consumed by servers and network equipment installed in data centers, is expected to reach 497.2 MW in 2024.

The total raised floor space for data centers is expected to be approximately 2.28 million square feet by the end of the year. This figure is anticipated to more than double to 5.3 million square feet by 2029. The Mordor Intelligence report suggested that the surge in digital purchases and the burgeoning online activity are the primary drivers behind this expansion.

Furthermore, the volume of installed racks in data centers across the Philippines is projected to increase significantly, with approximately 114,058 installed racks by the end of 2024 and 266,405 units by 2029.

On the other hand, the Department of Information and Communications Technology (DICT) is anticipating a fivefold increase in data center capacity by 2025, reaching around 300 megawatts.

Subsequently, a report by 2024 Arizton Advisory & Intelligence mentioned that the country is becoming an attractive destination for investors due to its growing data center market in Southeast Asia, driven by a cloud-first strategy, a favorable business environment, and a strong regulatory framework.

Among those in the business environment, broadband provider Converge ICT Solutions, Inc. (Converge) has announced its plan to invest up to P5 billion over the next three years for the establishment of data centers in the Philippines. These data centers will be aimed at housing the company’s planned digital platforms, in line with the increasing demand for innovative services in the digital age.

“The digital highway is already built, from business-to-consumer and business-to-business. What we need next are platforms, storage, and computing on top of the highway,” said Converge CEO and Co-Founder Dennis Anthony H. Uy in a statement.

According to Mr. Uy, the investment reflects the company’s anticipation of a growing demand for online services and the necessity of robust infrastructure to support these services in the evolving digital landscape.

Across the telecommunications industry, operators are actively establishing data centers to meet the increasing needs of tech giants like Amazon, Google, and Meta, continuously searching for new locations to accommodate their growing databases.

Pioneering sustainability initiatives amid growth

The DICT anticipates a significant surge in energy demand, specifically 400 MW-600 MW in the coming years to support the operations of hyperscale data centers. These facilities, known for their massive computing capabilities, require robust energy infrastructure to function efficiently.

Addressing this demand, the government plans to enhance its energy infrastructure, including increasing the number of submarine cables to 14 within the next two to three years. These cables are critical for ensuring reliable and high-speed connectivity, which is essential for data centers operating at scale.

The Department of Energy (DoE) is spearheading efforts to integrate “smart and green technologies” into the national power grid, optimizing the use of renewable energy sources such as solar and wind power.

Meantime, Converge is setting new benchmarks in the Philippine data center landscape with its sustainability initiatives.

Recently, the company has partnered with Super Micro Computer, Inc., (Supermicro), aimed at developing energy-efficient data centers. The two companies have signed a memorandum of understanding to begin developing an AI-powered “green” data center in the Philippines.

“Aside from being energy saving with its liquid cooling technology, Supermicro’s servers provide exceptional AI (artificial intelligence) computing capabilities and intensive deep learning tasks that will allow us to support and deploy many AI applications,” Converge’s Mr. Uy said.

Supermicro, based in California, USA, specializes in providing IT solutions for data centers, including energy-saving servers, storage systems, and software. With its leveraging liquid-cooling technology, Supermicro aims to reduce data center facility power consumption by up to 40%.

“These high-performing servers can handle immense AI and machine learning workloads but with the more efficient liquid cooling solution provided by Super Micro, the heat by-product will be controlled, reducing power consumption. We want to maintain our data center’s energy efficiency; so this is geared towards that,” Mr. Uy said. — Mhicole A. Moral