AI Data Centres: How Many Do We Need?
By Elizabeth Su
July 2025 FEATURE
TODAY, THERE ARE 11,800 data centres in the world.[1]
According to March 2024 statistics, the US is home to 5,381 data centres, followed by Germany (521), the UK (514), China (449), Canada (336), France (315) and Australia (307). Southeast Asian countries in the top 25 ranking include Singapore, ranked #19 with 99 data centres, and Indonesia, ranked #22 with 79 data centres.
On 24 December 2024, the Malaysian Investment Development Authority (MIDA) announced that Malaysia had strengthen edits position as Southeast Asia’s leading digital hub, attracting a total of RM141.72bil in digital investments during the first 10 months of the year, a threefold increase from the RM46.2bil achieved in 2023.[2] Malaysia once again ranked first in its SEA-5 Data Centre Opportunity Index, having recorded a significant annual take-up of 429 megawatts (MW) to outperform regional peers.
As of the end of 2024, Malaysia hosts 54 operational data centres (including two in Penang) offering a 504.8MW capacity, with Johor leading in IT capacity and Klang Valley remaining a core market. Emerging hubs included Sarawak, Negeri Sembilan and Kedah.
Recently, Malaysia launched the region’s first sovereign, full-stack AI infrastructure,[3] “Strategic AI Infrastructure: Trusted, Sovereign and Global”, empowering government, businesses and universities to leverage AI in improving services, boosting productivity and driving innovation.[4] Malaysia’s investment in data centres aligns with its digitalisation strategy and global trends in the use of AI, which requires the resource-intensive power of data centres to support its data processing.
Malaysia's Digital Strategy
In August 2020, the Malaysia Digital Economy Corporation (MDEC), was tasked with overseeing the digitalisation of the nation and the implementation of the Malaysia 5.0 vision, a key aspect of which is building Malaysia’s digital infrastructure with a “Unity Alliance”, an economic coalition comprising government and private enterprises to support Malaysia’s digital aspirations.[5] On 23 April 2021, MIDA and MDEC jointly established a Digital Investment Office to play a vital role in positioning Malaysia as the preferred digital hub, firmly establishing Malaysia as the “Heart of Digital ASEAN” in Southeast Asia.
Between 2021 and 2024, Malaysia attracted an estimated RM278bil in digital investments, of which about RM184.7bil has gone into cloud infrastructure and data centre projects.[6] Amazon Web Services was the first to launch its Malaysian cloud region in August 2024, with plans to invest RM29.2bil through 2038, while Google committed to developing its first data centre and the establishment of a cloud region in Malaysia with a RM9.3bil investment.[7]
Microsoft announced last year that it would invest RM10.2bil over the next four years to support Malaysia’s digital transformation, the single largest investment in its 32-year history in the country.[8] On 20 March 2025, Microsoft announced its plan to launch its first three data centres in Malaysia, by mid-2025, known as the Malaysia West cloud.[9]
All eyes seem to be on us. At the end of 2024, UV Cell Solar and IOZELA Data Center announced a strategic collaboration to develop state-of-the-art data centres in Penang and Pahang.[10] Penang would serve as the location for a highly advanced data centre complex with a green plantation farm to support Malaysia’s Environmental, Social and Governance (ESG) goals, while Pahang would become the site for a comprehensive renewable energy hub, including a solar farm and a biomass farm, designed to generate between 300 and 500MW of clean power. This facility is expected to power both the Penang data centres and other surrounding infrastructure with renewable energy.
Electricity For Data
A Guardian analysis from 2020 to 2022 revealed that the real emissions from “in-house” or company-owned data centres of Google, Meta and Apple are probably about 7.62 times higher than officially reported, essentially compromising some of their sustainability targets. Technology firms are increasingly turning to nuclear sources of energy to supply the electricity used by the huge data centres that drive AI.
According to the International Energy Agency (IEA), about 1.5% of the world’s electricity is currently used to power data centres.[11] An April 2025 IEA report projects data centres, driven by AI, will use double the electricity by 2030. In Australia, Morgan Stanley estimates data centres are expected to use 8% of the electricity on the country’s power grid by 2030.[12]
With Malaysians having to manage higher electricity costs, what with the base electricity tariff in Peninsular Malaysia being raised by 14.2% to 45.62 sen per kilowatt-hour (sen/kWh), compared to 39.95 sen/kWh between 2022 and 2024,[13] I wonder if it makes sense for Malaysia to go all-out to further develop data centres.
Water For Data
Many data centres also consume large amounts of water to cool the servers. Due to the high resource needs of AI workloads, AI models need AI data centres—which means re-engineering data centres to meet the needs of AI: this means higher rack densities, innovative and hybrid cooling, and a greater need for power.[14]
In 2024, Sydney experienced concerns that its data centres were straining the area’s water supply. [15] Increasing tensions over water usage between AI data centres and local communities could be exacerbated by the nature of AI data centres being water guzzlers. It is obvious that managing energy and water use will become more challenging for data centres in a changing climate, especially for data centres located in regions with extreme heat days. What more can we say for countries like Malaysia that lie on the tropical belt?
Eventually, policymakers in Malaysia will have to accept some hard truths about AI and data centres, and make some strategic decisions with regard to aligning the country’s digital transformation with the growth of AI data centres.
FOOTNOTES
[1] https://www.visualcapitalist.com/ranked-the-top-25-countries-with-the-most-data-centers/ - 21January 2025
[2] https://www.mida.gov.my/mida-news/malaysia-ranked-first-in-sea-5-data-centre-opportunity-index/ - 24Deecember 2024
[3] Full-stack infrastructure is a comprehensive solution that has all the needed components to develop, deploy and operate applications and services. Sovereign AI is the nation’s ability to develop and deploy full-stack AI using its own resources.
[4] https://www.bernama.com/en/news.php?id=2424455- Malaysia launches region's first sovereign full-stack AI infrastructure - 20 may2025
[5] https://mdec.my/blog/malaysia-5-0-unity-alliance - 6 August 2020
[6] https://www.therakyatpost.com/tech/2025/05/15/malaysias-data-centre-boom-building-for-the-future-or-just-hosting-it/- 15 May 2025
7] https://theedgemalaysia.com/node/736787 - “The riseand rise of the Malaysiandata centre hub”, 6December 2024
[9] https://www.reuters.com/technology/microsoft-malaysia-launch-three-data-centres-q2-2025-2025-03-20/
[10] https://uvcellsolar.com/news/sustainable-data-center-development-in-penang-and-pahang/
[11] https://www.iea.org/reports/energy-and-ai
[12] https://www.abc.net.au/news/2025-05-20/data-centre-growth-energy-water-internet-future/105089876
[13] https://www.tnb.com.my/assets/newsclip/27122024c.pdf- Base electricity tariff to rise 14.2% starting July, 27 December 2025
[14] https://www.macquariedatacentres.com/blog/what-is-an-ai-data-centre-and-how-does-it-work/ - 15 July 2024
[15] https://www.abc.net.au/news/2025-05-20/data-centre-growth-energy-water-internet-future/105089876
Elizabeth Su
is a Harvard Mason Fellow (Class of '97). She is very curious about people and the world around her, and believes that asking questions is a great way to learn. Elizabeth teaches, writes and loves storytelling.
