Investors are looking at opportunities to build hyperscale data centres
Internet traffic has exploded during the Covid-19 outbreak. Millions of people around the world are working from home, studying in virtual classrooms, video calling with relatives and binge-watching on Netflix, all of which has put increasing strain on the virtual plumbing that keeps our data flowing.
Except that it isn’t “virtual”, of course. The internet works by magic as far as most of us are concerned, but it’s really a huge computer network that isn’t even slightly virtual. The wireless router sitting behind your television or next to your desktop is connected to every other router in the world thanks to millions of kilometres of cables that run under the ground, rest on the seabed and dangle from telephone poles.
If that seems incredible, it should. But it’s also a problem, and not only when large swathes of the world are quarantined at home. As more people do more stuff online, especially in developing countries, it’s no longer good enough to be pinging out data from a rack of servers sitting in California. To avoid those dreaded spinning rings that tell us our movie is buffering, streaming companies are going local, putting their huge data libraries as close to customers as possible to avoid internet bottlenecks. And the same is true of every other kind of online service, from social media to software.
Companies are also storing more data about us than ever before, tracking our online behaviour, as well as our offline behaviour, such as where we are in the world, and feeding it to algorithms that predict what we want to buy or watch or listen to.
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In China
All of this is creating huge demand for ever bigger data centres. For investors, this has created a kind of gold rush, as data centre companies seek funding to build so-called hyperscale facilities with thousands of servers. Until recently, most of these were in the US and belonged to companies such as Amazon, Google and Microsoft, but China is catching up quickly.
“We call it Chinascale, because it’s bigger than hyperscale,” says Oliver Jones, chief executive of Chayora, a Hong Kong company that focuses on building data centres in Mainland China. “There’s going to be more data centres built in China in the next 10 years than the rest of the world put together.”
The levels of technical innovation in artificial intelligence, machine learning and related applications in China mean that data volumes are growing exponentially, according to Jones.
One of the biggest investors in this field is Actis, a British private equity firm that led a US$180 million Series-C investment in Chayora in October through its Asian real-estate funds.
Chayora already has a data centre building on an 32-hectare campus in Tianjin that serves the greater Beijing area of 150 million people. The new injection of cash will support the acquisition of further land in Tianjin and also the first land plots for planned centres in provinces neighbouring Shanghai.
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