Johor on path to top data centre hub in region

Why current water, power shortfalls in Johor are temporary and won't affect data centre growth.

Johor on path to top data centre hub in region
Photo Credit: Unsplash/Alfred (Kota Tinggi, Johor)

Any current water, power shortfalls in Johor are temporary and won't affect its data centre growth.

I recently wrote that Malaysia's breakneck data centre growth could strain resources, based on a Straits Times report.

An inaccurate picture

However, an insider I spoke with insisted that the ST report stitched together various quotes out of context to paint an ultimately flawed picture.

  1. Water shortage an issue of planning

The thesis I was presented with is this: Johor can support the data centre growth, and current shortages have to do with planning lapses rather than the unavailability of resources.

Of course, it's worth noting that while electricity can be diverted easily, water treatment plants built in the wrong places might mean surpluses in one region and shortages in another.

  1. Power infrastructure can be built

There is no disputing that Malaysia has more than adequate power. Moreover, the potential of solar power production could yet turn it into a energy exporting juggernaut.

What's left is connecting the dots with an expansive power grid to serve the new data centres. And with demand, there's ample justification to build up the grid.

Legitimate concerns

However, two concerns came up during the conversation.

  1. Oversupply of data centres

There is no doubt that there is an impending glut of data centres in Johor. I think industry players are cognisant of that.

There are only that many hyperscale cloud customers, and there is no indication to date of enterprises in Singapore migrating to Johor en mass.

Will the oversupply be temporary or a protracted one? How it pans out remains to be seen.

  1. Phantom demand?

Another concern revolves around phantom data centre demand.

Malaysia's TNB has received supply applications for a staggering 11,000MW of power for new data centres, but who is hedging and who is serious?

This is due to the difficulty of identifying:

  • Players that are purely speculating.
  • Serious data centre operators.

Also, are there providers who have unknowingly inked contracts with entities seeking only to circumvent sanctions on Nvidia GPUs? 🧐

Ultimately, the die is cast. Johor will develop into a top data centre hub over the next few years. The only question is the number of bumps along its meteoric rise.

What do you think?