Japan Data Center Market SIZE & SHARE ANALYSIS - GROWTH TRENDS & FORECASTS UP TO 2030

Japan Data Center Market Analysis

The Japan Data Center Market size is estimated at 2.32 thousand MW in 2025, and is expected to reach 3.66 thousand MW by 2030, growing at a CAGR of 9.51%. Further, the market is expected to generate colocation revenue of USD 2,511.5 Million in 2025 and is projected to reach USD 4,981.5 Million by 2030, growing at a CAGR of 14.68% during the forecast period (2025-2030).

Japan's data center market industry is undergoing significant transformation driven by the government's comprehensive Digital Garden City Nation scheme, which includes an investment of JPY 5.7 trillion for nationwide digitalization efforts. The Japanese Growth Strategy Council has prioritized digital transformation as a key area for stimulating economic growth, implementing new policies and measures through the "Basic Act on Forming a Digital Society." The Ministry of Economy, Trade, and Industry's recent initiative in 2023 to decentralize data centers across regions demonstrates the government's commitment to digital infrastructure development, with over 100 regional governments expressing interest in hosting new facilities. The industry's maturity is evident in its operational efficiency, with data centers achieving a rack space utilization rate of 75.1% in 2022, indicating robust demand and effective data center capacity management.

The market is witnessing a substantial shift toward sustainable infrastructure development, particularly in the deployment of green data centers. NTT Corporation's significant investment of approximately JPY 40 billion in 2022 for new green data centers exemplifies this trend, with facilities utilizing 100% renewable energy. The Japanese government has implemented ambitious environmental targets, offering tax incentives amounting to JPY 5 billion for carbon neutrality investments in data center infrastructure. These initiatives align with the country's broader goal of achieving zero greenhouse emissions by 2050, encouraging data center operators to adopt energy-efficient technologies and sustainable practices in their operations.

The manufacturing sector's digital transformation is driving significant demand for data center growth services, with Japanese manufacturing companies investing approximately USD 890 million in digital infrastructure. This transformation is characterized by the integration of advanced technologies such as private 5G networks, IoT devices, and smart factory solutions. The industry landscape is evolving rapidly, with 27 operators managing 97 data center facilities expected by 2024, indicating a robust and competitive market environment. The adoption of tier 3 and tier 4 facilities continues to dominate the market, with enterprises prioritizing high reliability and operational efficiency.

Regional development initiatives are reshaping the data center landscape across Japan, with the government actively promoting facilities in colder regions to leverage natural cooling advantages and reduce electricity costs. The Ministry of Internal Affairs and Communications has set an ambitious target of achieving 98% 5G population coverage by the end of March 2024, supporting the distributed data center strategy. The government's plan to invest in subsea cable infrastructure and data center decentralization, part of the JPY 5.7 trillion Digital Garden City Nation scheme, aims to ensure bandwidth diversity and revitalize regional areas. This comprehensive approach to infrastructure development includes plans for constructing more than a dozen data centers in rural areas over the next five years, coupled with the deployment of fiber cable off Japan's west coast.

Japan Data Center Market Trends

Rising smartphone penetration rate and emergence of new e-commerce platform in the country would drive the market

• The total number of smartphone users in Japan was 107.1 million in 2022. It is expected to witness a CAGR of 1.3% during the forecast period, reaching 117.77 million by 2029.
• In 2021, the smartphone penetration rate among households in Japan was close to 89%. The average time people spend on mobile internet use has increased in recent years, offering business opportunities to related industries, such as e-commerce.
• With the emergence of online shopping platforms, small businesses are also switching to online modes of payment and digital presence in the e-commerce world. The big and well-established companies also incorporate e-commerce platforms and the traditional form of business. For instance, in April 2022, Westlake Akishima, a Tokyo-based major supplier of specialty stabilizers for the PVC industry, announced a new e-commerce platform, extending the online buying experience to its buyer with security and convenience. Such developments are shaping the e-commerce and online payment ecosystem, impacting mobile payments in Japan.

Expansion of 5G roll out by major mobile operators coupled with government support in same segment would drive the data center market

• The Japanese government assigned the three mobile operators in Japan — NTT Docomo, KDDI au, and Softbank, as well as the new arrival Rakuten Mobile, with 5G spectrum in April 2019. In the coming years, the four Japanese carriers are expected to spend more than USD 14 billion in capital expenditures, including investments in base stations, servers, and fiber optics, to build their 5G networks.
• Since the start of 2021, Japan’s mobile operators have been accelerating their 5G rollout. SoftBank aimed to deploy over 50,000 5G base stations and reach 90% population coverage by the end of March 2022. KDDI au aims to boost from just 10,000 base stations in March 2021 to 50,000 a year later. NTT DoCoMo was expanding its 5G network during 2021, aiming to reach 10,000 base stations by June and 20,000 by the end of March 2022, with 55% population coverage using the new high-speed 5G spectrum.
• The Ministry of International Affairs and Communications aims to continue moving the Japanese 5G experience forward. It set a target of 98% 5G population coverage by the end of March 2024. Overall, Japan aims to boost the amount of spectrum available for 5G services.

OTHER KEY INDUSTRY TRENDS COVERED IN THE REPORT

Segment Analysis: Data Center Size

Mega Segment in Japan Data Center Market

The mega data center segment dominates the Japanese data center market, holding approximately 37% data center market share in 2024. With the advent of 5G technology and industrial digitalization, the demand for mega data centers continues to rise significantly in the country. The segment's prominence is particularly evident in Tokyo, where 70% of the mega facilities are located, followed by Okuma and Kitakyushu. Major players like Digital Realty Trust Inc., AirTrunk Operating Pty Ltd, and IDC Frontier Inc. are driving the segment's growth with multiple mega facilities each. These companies are projected to expand their combined capacity to 345 MW, focusing on strategic locations in Tokyo, Osaka, and Kyoto, where local governments offer attractive incentives, including tax benefits on electricity and land.

Small Segment in Japan Data Center Market

The small data center segment is experiencing the highest growth rate in the Japanese data center market, with an expected growth of approximately 13% during 2024-2029. This growth is particularly noteworthy despite the segment's relatively small current market presence. The segment's expansion is driven by companies like Marunouchi Direct Access, Telehouse (KDDI Corporation), Digital Edge, Edge Centre, and AT Tokyo, which primarily operate these facilities across Tokyo. The construction of five new small-size data centers is currently underway, demonstrating continued investment in this segment. However, with the growing popularity of 5G technology and the exponential increase in data generation, there is a notable shift towards massive and mega data centers in the country.

Remaining Segments in Data Center Size Market

The massive, large, and medium segments play crucial roles in Japan's data center market landscape. The massive segment caters to enterprises requiring substantial computing power but not at the scale of mega facilities, with facilities primarily concentrated in Tokyo and Osaka. The large segment serves as a backbone for numerous enterprise-level operations, offering a balance between capacity and manageability. The medium segment focuses on providing specialized services to specific industry verticals, with most facilities maintaining Tier 3 certification standards. These segments collectively contribute to the market's diversity, offering various options to meet different organizational needs and technological requirements.

Segment Analysis: Tier Type

Tier 3 Segment in Japan Data Center Market

Tier 3 data centers dominate the Japanese data center market, accounting for approximately 79% of the total IT load capacity in 2024. This significant data center market share is driven by the segment's superior reliability and affordability compared to other tiers. Tokyo hosts the maximum number of Tier 3 data centers in the country, with a market share of around 57%, followed by Osaka at 22%, while the remaining facilities are spread across Nagoya, Inzai, Yokkaichi, Okuma, and Kitakyushu. Major cloud service providers and enterprises prefer Tier 3 facilities due to their optimal balance of redundancy, performance, and cost-effectiveness. The segment's growth is further supported by the ongoing construction of 17 new Tier 3 data center facilities by major players like Equinix Inc., Digital Realty Trust Inc., NTT Ltd, and Vantage Data Centers, primarily concentrated in Tokyo, Osaka, Kyoto, and Inzai.

Tier 4 Segment in Japan Data Center Market

The Tier 4 segment is experiencing remarkable growth in the Japanese data center market, with projections indicating an expansion rate of approximately 23% during 2024-2029. This accelerated growth is primarily driven by increasing demand for maximum reliability and uptime from mission-critical applications and services. The segment is witnessing substantial investments in new facilities, particularly in Tokyo's hotspot, with plans for the construction of mega data centers boasting capacities exceeding 400 MW. The growth is further supported by the increasing adoption of advanced technologies and the rising need for fault-tolerant infrastructure among financial institutions and large enterprises. Major operators are focusing on incorporating cutting-edge cooling systems, power distribution, and security features to meet the stringent requirements of Tier 4 certification.

Remaining Segments in Tier Type Segmentation

Tier 1 & 2 data centers represent a small portion of the Japanese data center market, primarily serving specific niche requirements. These facilities are mainly concentrated in Tokyo and Okinawa, with plans for new small data centers in Okinawa and Nagoya. While these tiers offer basic infrastructure and are more cost-effective, their lower redundancy levels and higher downtime risks make them less attractive for most businesses in Japan's technology-driven market. The limited adoption of Tier 1 & 2 facilities reflects the market's strong preference for higher tier certifications that provide better reliability and performance guarantees.

Segment Analysis: Absorption

Utilized Segment in Japan Data Center Market

The utilized segment dominates the Japanese data center market, accounting for approximately 78% of the total IT load capacity in 2024, demonstrating its significant market presence. This segment is also projected to grow at around 7% CAGR during 2024-2029, driven by increasing digitization efforts across the country. The Japanese government's massive digitalization initiative with a budget of JPY 5.7 trillion has been a key factor in driving utilization rates. While Japan's public spending on cloud services remains among the lowest globally, corporate adoption is progressing rapidly, with penetration rates rising significantly for SaaS, IaaS, and PaaS services, particularly in back-office applications. The utilized capacity is experiencing constant growth due to the increasing demand from various sectors, and Japan is positioned to become a major data center market in North Asia, especially as the allure of Hong Kong diminishes with growing regional challenges. The segment's strong performance is further supported by the country's robust technological infrastructure and favorable business environment for data center operations.

Non-Utilized Segment in Japan Data Center Market

The non-utilized segment represents the available capacity in Japanese data centers that remains to be leveraged, playing a crucial role in the market's future expansion potential. This segment serves as a strategic reserve for accommodating sudden surges in demand and provides flexibility for data center operators to scale their operations. The availability of non-utilized capacity enables data centers to maintain operational efficiency while ensuring they can respond quickly to new client requirements. Data center operators carefully manage this capacity to optimize their resource allocation and maintain competitive pricing structures. The segment also acts as a buffer for peak usage periods and helps maintain service quality during high-demand situations. The presence of non-utilized capacity is particularly important in major technology hubs like Tokyo and Osaka, where demand can fluctuate significantly based on market conditions and technological advancements. This segment also provides opportunities for new market entrants and existing players to expand their operations without immediate infrastructure investments.

Free With This Report

We provide a complimentary and exhaustive set of data points on the country and regional level metrics that present the fundamental structure of the industry. Presented in the form of 50+ free charts, the sections cover difficult to find data on various countries on smartphone users, data traffic per smartphone, mobile and broadband data speed, fiber connectivity network, and submarine cables.