Explainer (1): Demystifying Data Centres in Asia-Pacific
It all begins with an idea.
In a first of a new series of explainer posts, we unpack fundamental questions around data centres in Asia-Pacific: what is a data centre, how does it work, what role do data centres play in the economy and in the adoption of AI?
Stay tuned for further explainer posts from APDCA on key topics in the APAC data centre sector.
What Is a Data Centre?
Data centres have been likened to the brain of the internet or the central nervous system of the digital economy. But what exactly is a data centre?
Data Centres: The Physical Home of Data
A data centre is a physical facility that stores computing infrastructure, including servers, data storage drives, networking equipment. It is the physical home of data - the central hub for processing, transmitting, and safeguarding critical information for individuals, businesses, and governments.
What Is Inside a Data Centre? How Does It Work?
Data centres integrate multiple layers of technology and infrastructure to ensure performance, reliability, and security.
Typically, the following components go into the building of a data centre:
Servers are the cornerstone of data centres that handle data processing and storage. Today, servers are often made virtual.
Networking equipment provides connectivity within and outside the data centres, acting as the “internet highways” for data transmission between servers and storage.
Storage systems manage and store data within the data centre from apps and services.
Power systems, such as backup generators, are essential for keeping data centres running smoothly without interruptions while ensuring that data is safe and accessible.
Cooling systems use air conditioning and special cooling machines to maintain optimal temperature [ST1] and humidity levels. Efficient cooling saves energy and helps prevent overheating, hardware failures, and ultimate data loss.
What Are the Types of Data Centres?
Various types of data centres cater to organisations’ different infrastructure and scalability goals. APAC data centres can predominantly be categorised into four subtypes:
Enterprise Data Centres: Privately owned and operated by enterprises to support their internal IT systems and application. Often hosted in company premises and provide complete control over infrastructure and security.
Co-location Data Centres: Allow businesses to rent colocation infrastructure - space, power, cooling, and connectivity – while hosting and owning their IT infrastructure (e.g., servers, storage, firewalls).
Edge Data Centres: Smaller facilities located closer to end users and devices to reduce delay. Often support applications that require real-time processing (e.g., IoT devices, 5G networks, and autonomous vehicles).
Hyperscale Data Centres: Provides massive scalability capabilities to handle large-scale workloads, usually houses thousands of servers.
Data Centres and Our Digital Lives
Data centres underpin our digital lives. We interact with data centres hundreds of times daily – our financial transactions, communication, shopping, leisure and travel all pass through data centres.
For example, digital transactions that take place for a traveller are supported by data centres[1]. When a traveller books flights and accommodations for travels, the booking websites and apps are enabled by data centres. When the traveller uses GPS map apps to navigate during the trip, this similarly requires data centre storage and processing power.
The Role of Data Centres
For businesses
In today’s digital landscape, businesses rely heavily on computing equipment – to draft emails, power e-commerce platforms, run internal applications, or deploy AI tools.
Data centres offer the foundation for businesses’ IT systems, supporting almost all compute, data storage, network and business applications. Data centres help businesses centralise their IT equipment and operations (which saves costs), scale efficiently, and enable disaster recovery through backup power supplies and data replication. This is seen in illustrative examples such as[2]:
A telecommunications company uses geographically distributed data centres to back up critical customer data and provide failover solutions, ensuring that its services remain online even in the event of a local outage.
A bank relies on data centres to drive its real-time trading systems, ensuring rapid transactions and secure management of customer data.
For governments
Data centres are essential to the digitalisation of public services across APAC. Public sector organisations have accelerated their transitions to cloud for scalability and cost-efficiency, enabling governments to deliver citizen-centric services more effectively and at lower cost. Notably, several governments have already outlined specific national cloud adoption targets, including:
Thailand: The Digital Economy and Society Ministry plans to enforce its “Cloud First” policy via the Government Data Centre and Cloud (GDCC) system on 1 October 2025. A full-scale cloud government will allow agencies to enhance the efficiency of data analysis to better address Thailand’s development needs.
India: The National Informatics Centre (NIC) has established National Data Centres (NDC), providing cloud services to government ministries, state governments, and public sector undertakings (PSUs) to deliver more efficient e-governance services.
Malaysia: In October 2024, Malaysian Prime Minister Anwar Ibrahim announced that the country is set to launch a national cloud policy, which will focus on enhancing public service innovation.
Powering the AI Revolution
Increasing AI and cloud adoption is driving demand for data centres across Asia-Pacific. According to a July 2024 report[3], APAC data centre capacity is expected to grow at a compound annual average rate of nearly 20% through 2028. This will involve over $564 million of investment through 2028.
This investment will be critical for powering AI-based innovation that is transforming people’s lives across the region. Citizens across Asia-Pacific are already benefiting from AI, from improved access to quality healthcare, expanding educational opportunities, and raising industrial capacity:
In Malaysia, the Ministry of Health launched an AI-powered diagnostic tool called the Diabetic Retinopathy Inference with Multi Artificial Neural Network Technology Automation (DR.MATA), which enhances the accuracy and efficiency of diagnosing diabetic retinopathy.
In India, the Read Along Initiative (Bolo) initiative uses voice-recognition technology to help improve learning skills, showcasing AI’s potential in personalising learning and delivering quality education.
In Japan, AI is helping to improve the efficiency of the production of electric vehicles (EV), as seen in the Toyota Research Institute’s use of generative AI tool to accelerate the EV design process.
Looking to the Future
Data centres enables the digital transformation of all types of business and the digital delivery of public services. The demand of AI workloads is driving further investment and innovation in ensuring that data centres are built and operated in a sustainable way. APDCA members will continue to innovate in providing a secure and sustainable foundation for Asia-Pacific’s digital future.
[1] Data centres: The good they do | Digitalisation World
[2] A Guide to Common Data Center Use Cases - Data Center Asia
[3] APAC data centre capacity to double by 2028: Moody’s | Asian Business Review