Singapore's 'fomo' amid AI data center boom

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Singaporeans are a competitive bunch. A must-know English word for those living in a city-state. Why?. The Chinese Hokkien term means fear of missing or losing and often refers to trying to outdo someone else. “Fomo on steroids” is how a Singaporean friend describes it.

One of the best places to see this in action is the lunchtime queues around the stalls of the city-state's favorite hawker food markets. Another area to observe Why? The mindset in the Asian financial center is in business, such as foreign investment.

Singapore made a surprise announcement last month that it would free up more power for data center expansion. The move comes as chief executives from Nvidia, Google, Microsoft and others have waved in recent months from neighboring Malaysia – and other countries in Southeast Asia – pledging to invest billions in data centers.

In Malaysia alone, tech groups – three of the top four global companies by market capitalization – have committed $8.5bn in new data centre, cloud and artificial intelligence investments in the past six months. This is why more than one Malaysian government official joked that Singapore's court ruling on more data centers was “typical Singapore”. Why? React to your neighbor's advances.

There is, of course, some rivalry between Singapore and its neighbours, particularly Malaysia, from which it gained independence in 1965. But dismissing Singapore's move is too simplistic. Why?-ness — even if there is an element of it in play. The city-state is already hyper-connected and has one of Asia's largest data center markets – a trend that accelerated as Hong Kong became a less favored location for data centers and undersea cables. It is one of the world's leading submarine cable hubs, with 25 active submarine cables and more connections to come. None of this is going to change anytime soon.

The decision to expand data center capacity last month came as a surprise to many as the government imposed a more than three-year ban on new data centers between 2019 and 2022. references. The ban helped push data center companies to nearby Johor, a Malaysian state, just across the causeway, and to a lesser extent to Batam, which is located near the Indonesian archipelago.

The problem Singapore now faces – like many other countries – is that it has grossly underestimated how demand for AI will spread across the global market for data centers in the coming years. The city-state has made little secret of the fact that it wants to be the AI ​​hub for Southeast Asia, if not the top one in Asia.

This is because being such a hub brings other economic benefits. For example, as part of Nvidia's data center investment in Malaysia, the company will partner with local conglomerate YTL Power to build the country's fastest supercomputer using Nvidia's AI chips. Microsoft unveiled landmark AI infrastructure investments in Indonesia and Thailand last month.

Singapore realizes that it cannot ultimately compete with its neighbors for land and power. The key is how to accomplish this. Johor is popular with global tech giants from Byte Dance to Nvidia and Microsoft because it is just a few kilometers away from hyper-connected Singapore.

Both Johor and Singapore can benefit from the data center boom. They complement each other,” says Ranganath Salgam, chairman and chief executive of Princeton Digital Group, an Asian data center company based in Singapore but expanding in Johor. has been It is a “symbiotic relationship,” he added.

And as more and more companies diversify supply chains away from China that puts Singapore in pole position. One way to take advantage of this is to promote a Singapore+ strategy, whereby companies set up a headquarters in the country to gain access to its international business environment, free trade agreements and professional talent, but then Manufacturing — or data center — facilities in places like Johor.

This is already a long term trend. Singapore was the top recipient of foreign direct investment flows to Southeast Asia between 2013 and 2022, according to the latest data published by the bloc. In 2022, Singapore attracted $141 billion in FDI, more than half of the region's total. Indeed Singapore should be the same. Why??

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