Google Considers Data Centre Investment in Vietnam

By Phuong Nguyen and Francesco Guarascio

HANOI (Reuters) – Alphabet’s Google (NASDAQ:GOOGL) is contemplating the establishment of a large data centre in Vietnam, marking a significant investment by a major U.S. tech company in the region.

Google is exploring the possibility of setting up a “hyperscale” data centre near Ho Chi Minh City, Vietnam’s economic hub. The source, who requested anonymity, noted the plans are not public yet.

This investment could boost Vietnam’s economy, which has struggled to attract foreign capital for data centres due to inadequate infrastructure. Large tech firms tend to prefer countries with better facilities in the region.

The timeline for Google’s decision remains uncertain, but internal discussions are ongoing with an anticipated operational date around 2027. A Google spokesperson declined to comment on the data centre plans.

Hyperscale centres are industry giants, consuming power equivalent to that of a large city. According to estimates from real estate consultant Jones Lang LaSalle, a hyperscale data centre with 50 megawatts (MW) capacity could cost between $300 million and $650 million.

The motivation behind Google’s potential move includes a growing number of domestic and foreign cloud services clients in Vietnam and the expanding digital economy. Vietnam is recognized as one of the fastest-growing markets for YouTube, Google’s widely-used video sharing platform.

Currently, the leading operators in Vietnam’s data centre market, based on space, are state-owned enterprises IDC Becamex and VNPT, as reported by an internal market study seen by Reuters.

In May, it was reported that Alibaba (NYSE:BABA), a Chinese e-commerce giant, was also considering building a data centre in Vietnam, though they declined to comment.

Growth Strategy

Despite the significant demand for digital services from Vietnam’s 100 million citizens, foreign investors remain cautious due to issues like power shortages, unappealing investment incentives, and fragility of the internet infrastructure, which relies on aging subsea cables, experts say.

In Southeast Asia, countries like Singapore, Malaysia, and Thailand have garnered larger investments from global tech firms better than Vietnam.

Recently, Google announced a $2 billion investment in Malaysia to develop its first data centre and Google Cloud region there.

Regulatory challenges concerning foreign ownership and data localization have hindered investments, though a reform in November allowed foreign data centre operators full ownership.

In addition to the data centre plans, Google is establishing a representative office in Vietnam and hiring engineers, marketing experts, and other professionals.

Google is focused on better serving its Vietnam-based advertising clients and supporting the country’s digital transformation. They are offering 40,000 scholarships for basic AI courses and $350,000 each for 20 selected AI start-ups, according to Google Vietnam Managing Director Marc Woo’s recent LinkedIn post.

Furthermore, Google benefits from a robust network of suppliers in Vietnam that assemble products including Pixel smartphones.