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How Singapore is Growing its Data Sector

The tiny Southeast Asian city-state of Singapore is known for being a global economic hub, recording an impressive GDP of over $466.79 billion in 2022.

Very recently, Singapore caught the attention of observers in the chip market when it was revealed that the GPU processor leader, Nvidia, is shipping a surprising amount of its products to the city-state.

Asia’s ninth-largest economy has been quietly investing heavily in new chip technology. In fact, Singapore accounted for 15% or $2.7 billion of Nvidia’s third-quarter revenue, lagging behind tech giants like the United States, Taiwan, and China.

So, why is Singapore buying so many chips? And how will that affect it in the future?

Singapore’s chip-buying spree

Nvidia, the global market leader in GPUs, recently posted its superb third-quarter results. The company’s $18.12 billion revenue was more than impressive since it’s up by 206% from a year ago and up by 34% from the previous quarter.

When looking at the company’s revenue by region, it’s no surprise that the U.S. is Nvidia’s main source of revenue, accounting for 34.77%. It was followed by the computer chip giant Taiwan, which accounted for 23.91%, then by China, including Hong Kong, which was 22.24%.

What came as a surprise, though, was the fact that Singapore came in fourth place in contributing to Nvidia’s revenue behind these countries. In fact, a significant amount of Nvidia’s revenue came from the small city-state.

Singapore accounted for about 15% or $2.7 billion of Nvidia’s revenue for the third quarter, a 404.1% jump from the revenue recorded in the same period last year, which was $562 million.

This outpaced Nvidia’s overall revenue growth of 205.5% from a year ago.

The comparison between Singapore and the U.S., Taiwan, and China is even more drastic if you consider the size of Singapore: per capita, Singapore spent $600 on Nvidia chips in the quarter, compared with only $60 in the U.S. and about $3 per capita in China.

What is Singapore doing with all these chips?

The answer to this question has to do with the recent surge in the city-state’s data center sector.

A data center is a facility that consists of networked computers, storage systems, and computing infrastructure that businesses and other organizations use to organize, process, and store large amounts of data.

Data centers are very important since they support almost all enterprise computing, storage, and business applications. Typically, a business heavily relies on applications, services, and data within a data center, making it a critical asset for everyday operations.

It isn’t surprising that Singapore is investing so much in data centers since the city-state is famous for its highly advanced telecommunications sector, impressive network infrastructure, and exceptional connectivity on a global scale.

Additionally, Singapore’s thriving digital economy, which is set to reach $30 billion by 2025, encompasses its data center industry.

When COVID-19 hit the well-connected Singapore, the demand for data center services, digitalization, and cloud services increased in both governmental and private sectors.

So, in January 2022, Singapore lifted a temporary suspension of the release of land for data center use. This moratorium was issued in 2019 in order to moderate the massive amounts of energy data centers consumed.

Data centers do use up a lot of energy, but their share of global electricity consumption in the last ten years has been stable at around 1%-1.3%.

After lifting the suspension, Singapore awarded rights to Equinix, Microsoft, and Chinese data center solutions provider GDS to develop new data center projects in Singapore.

Now, the city-state boasts 100 data centers, 1,195 cloud service providers, and 22 network fabrics, making its digital infrastructure outstanding. In fact, Singapore accounts for 60% of Southeast Asia’s total data center capacity.

In addition to that, Singapore emerged third globally in terms of data center market rankings, according to a report by Cushman and Wakefield, with Northern Virginia and Portland in the U.S. tied for first place. At the same time, Hong Kong comes in fourth.

According to the International Trade Administration, demand for data centers in Singapore will continue to grow as technologies like digital apps, e-commerce, artificial intelligence, crypto-trading, blockchain activities, and online gaming also grow. Additionally, the shift to hybrid working and digitalization has also contributed to the demand for more data centers.

The data center sector is growing rapidly in the entire world, not just in Singapore. In fact, if we go back to the Nvidia SEC filing, you’ll see that 80% of Nvidia’s third-quarter sales came from the data center segment. At the same time, gaming, automotive, professional visualization, and others make up the other 20%.

The perfect environment for data centers

Recognizing the importance of this sector, the Singaporean government passed many laws and regulations in order to safeguard the interests of data centers and increase investments in them.

For starters, plans were revealed to increase data centers’ share in total electricity consumption from 7% to 12% by 2030.

This comes amid global energy challenges, but Singapore’s data centers show a reliable infrastructure. They are operating efficiently, as shown by their Power Usage Effectiveness (PUE) scores, which is an efficiency metric for power consumption in data centers.

The average PUE for Singaporean data centers is around 1.47, reflecting the industry’s dedication to energy efficiency.

Adding to Singapore’s efficient and flourishing digital landscape, the Singaporean government passed several data sovereignty and security laws in order to protect investors and businesses in the sector, including the Personal Data Protection Act, which safeguards personal data, and the Cybersecurity Act, which is tasked with overseeing the cybersecurity landscape of computers and computer systems across Singapore.

Singapore also proved that it was concerned for the environment as much as it was concerned for security when the Singapore Standard for Green Data Centers was established.

This is a significant benchmark for sustainable and energy-efficient data centers in Singapore. It is modeled after the ISO 50001 Energy Management Systems (EnMS) and establishes a robust framework to systematically enhance energy efficiency and cut energy consumption within data centers.

Different organizations can consistently integrate energy-efficient and sustainable practices into their data center operations by embracing the benchmark, resulting in a significant reduction in annual energy consumption.

Additionally, the government started offering incentives to encourage investments in data centers, such as corporate tax exemptions or a reduced tax rate of either 5% or 10%.

What it means for Singapore’s future

For Singapore, the digital economy is extremely important.

It accounted for 17% of the GDP in 2022, compared to 13% in 2017. In fact, the economic contribution of the digital economy to Singapore’s GDP nearly doubled to 106 billion Singapore dollars ($77.5 billion) in 2022 from 58 billion Singapore dollars ($43.4 billion) in 2017.

Singapore’s digital economy is divided into two parts: the information and communications sector and digitalization in the rest of the economy, with one-third of the digital economy being driven by the information and communications sector, signaling its importance.

Singapore is seeking to capitalize on new technologies, and investment in data center infrastructure is necessary to support the growth of cloud computing, artificial intelligence, e-commerce, and other technologies and businesses that require large amounts of processing power and data storage.

Singapore’s ambitions for data centers don’t stop at its borders, as it also builds them in other Asian countries. Very recently, a plan was revealed to build two Singaporean data centers in Osaka for an estimated 100 billion yen ($660 million), with the first one set to open in 2027.

The Singaporean property investor behind this project, SC Capital, will lease the data centers to corporate clients and eventually sell them. After the sale, the properties will be operated for a fee.

This aligns with the city-state’s vision to expand and transform the sector completely, and if its digital economy nearly doubled in five years, then an even larger boom could happen in the future.

We live in the age of an interconnected digital landscape, so data centers serve as essential hubs of exchange.

Singapore has managed to emerge as a prime destination for the data center industry very quickly, with its technological advancements, fair and strong regulatory policies, and investor-friendly incentives.

These factors, along with the city-state’s strategic location and impressive digital infrastructure, helped Singapore attract global giants like Microsoft, Amazon, and Google. All established their data centers within Singapore’s borders, leading it to become a key player in the sector both regionally and globally.

The nation is committed to data security, privacy, and sustainability. This is in order to create a trustworthy environment for data center operations and attract many environmentally-conscious investors to Singapore.

Just by looking at Nvidia’s third-quarter financial statement, we can say that Singapore is correctly steering itself toward a new digital world that is certain to thrive in the future on a global scale.


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