Southeast Asia could become a booming AI market if its data centers can beat the heat

Southeast Asia is racing to build the infrastructure powering the AI boom, but its hot, humid climate could be making that expansion more complicated. Data center demand in the region, where supply is up to 70% lower than in mature markets like the U.S. and China, is expected to grow by 20% each year through 2028, according to the U.S.-ASEAN Business Council. There are now 370 data centers in the region, with the majority in Singapore, Indonesia and Malaysia.

“The ecosystem has realized that if they don’t latch on to this next wave, they might end up being digitally colonized,” Mayank Shrivastava, the CEO of Singapore-headquartered BDx Data Centers, told Fortune. “Economic gains flow to the country that converts raw material into finished goods–and, in this case, the raw material is data.” 

Yet, Southeast Asia’s sultry, tropical climate presents a unique challenge for its data centers, which require more energy than counterparts in cooler climates to keep servers up and running. The region’s temperature ranges between 80 and 95°F throughout the year, while data centers should ideally be maintained between 64 and 81°F, according to the American Society of Heating, Refrigerating and Air-Conditioning Engineers.

“The central issue in the tropics is not heat alon...