Quantum DC Advisory Chief Executive Officer Joshua Robinson believes that Thailand’s data center infrastructure could increase by 17 times to 2GW from a low base of 120MW over the next five to seven years.

Maybank Investment Bank which hosted Robinson said in a note that Robinson opined that the growth will be driven by demand from domestic consumers (72 million population) and enterprises (ASEAN’s second largest economy); favorable supply factors (allowing for 2 percent to 3 percent higher internal rate of return [IRR]), further topped up by artificial intelligence (AI).

Robinson also believes as other ASEAN markets are relatively mature, this could make way for Thailand to emerge as a market to also serve demand from the Philippines and Cambodia, Laos, Myanmar, and Vietnam (CLMV) markets.

He also noted that the risk of data center oversupply in Thailand is low for the coming decade, as the market is still in its infancy.

He opined that Thailand data center market is unlike Indonesia, which has undergone ten years of development.

“The current supply surge has created a somewhat artificial view of capacity, but I expect this to be absorbed within 12-16 months,

“Thailand’s buildout and absorption cycles will likely be much shorter than in more mature markets, with Thailand requiring significant catch-up development to meet growing demand,” he said.

With current capacity at about 120MW, he is very bullish and believe that in roughly five years Thailand’s capacity would be around >2 GW.

According to him, the high vacancy rate reflects a market in transition, with recent expansions outpacing current demand.

This should be viewed positively as it indicates available capacity to accommodate future growth.

He also highlighted that Thailand has both vibrant co-location markets in Bangkok and development potential in southern regions like Chonburi where subsea cables land.

He expects vacancy rates to shrink to single digits within three to five years as demand catches up with supply.

Robinson also opined that Thailand is different in the sense that it’s both a regional and domestic play.

With over 70m Thais and the second largest economy in Southeast Asia, he said there’s ample enterprise use cases for companies like AWS and Tiktok.

“These platforms come in to Thailand to support their end-users and improve support for both domestic users and regional users in neighboring countries like Vietnam and the Philippines,

“There is room for a lot more enterprise use cases as Thai cities have roughly a 20m population with a vibrant retail co-location market and vast amounts of subsea cables,” he said.

With good headwinds and a lot of announcements, he is very bullish that Thailand will grow rapidly in the next three to five years.

Thailand’s on-going digitization creates particularly strong demand for retail co-location services, which are more profitable than hyperscale despite smaller scale, he added.

According to the note, Thailand is experiencing significant hyper scaler investments (Google USD1B, AWS USD5B over 15 years and ByteDance $9 billion), supported by government
incentives such as Thailand 4.0 and the Eastern Economic Corridor initiative.

Unlike Singapore (too expensive) and Johor (predominantly Chinese hyper scalers), Thailand offers both regional and local market potential (Thailand has a population of 70m).

Thailand has advantages over neighboring countries, including its central geographic location, seismic stability, relatively stable politics, affordable land, and possible power tariff reductions.

Also, Thailand is at an earlier development stage for data centers than Indonesia or Malaysia, offering more runway for growth.

Land is more affordable in Thailand, and tariff relief on capital equipment could improve IRR by 2.5 percent to 3 percent over five years.

Construction costs in Thailand are approximately $8 million to $8.5 million per megawatt compared to over $10 million in Indonesia.

While power costs are currently higher in Thailand, the government is considering reducing tariffs by up to 30 percent, which would align it with regional markets.

This would mean that for hyperscale, returns of mid-teens over a five to seven year period is entirely possible.

“The region needs a more neutral, agnostic, and stable geography than the existing options, and Thailand checks all these boxes,

“Thailand can serve neighboring markets like Vietnam and the Philippines, which have historically been served from Singapore,” said Robinson.

Meanwhile, Robinson sees US export controls may have a dual impact, acting as both a demand-accelerator as well as a supply bottleneck.

He noted that Thailand is currently in the tier-2 sanctions category, and it’s not directly sanctioned, which positions it as a potential neutral ground for AI development.

However, he said Thailand will need to be careful to maintain transparency in reporting to avoid direct sanctions, especially with the potential prevalence of GPUaaS offerings to Chinese clients in Thailand, which would undermine its strategic position as a neutral zone for both US and Chinese operators.

“However, as we see a lot of Western announcements of investments in Thailand, we have also been observing many large Chinese domestic operators such as Bytedance aggressively trying to secure big contracts on the ground,” he said. 

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