Market Trends of Taiwan Data Center Construction Industry
Tier 3 Data Center Holds Majority Share
- Taiwan's data center construction market is experiencing consistent growth, driving service providers to adopt tier 3 standards. Consequently, tier 3 colocation facilities are sprouting up nationwide. As of 2023, Taiwan boasted over 20 tier-3 data centers.
- In the coming years, tier 1 and 2 data centers are projected to face a deceleration, with some even witnessing diminished growth. This trend is largely attributed to prolonged and irregular outages. Tier 3 data centers depend on a solitary cooling and electricity channel, boasting an uptime of around 99.67%. Despite being more budget-friendly, the restricted functionalities of tier 1 and 2 facilities are pushing end-users toward more sophisticated tier 3 and 4 options.
- Large enterprises, especially content-oriented companies, favor tier 3 data centers for their robust infrastructure, which includes features like remote assistance, disaster recovery, and low latency, leading to reduced downtime. Consequently, tier 3 facilities are poised to lead the market in the coming years.
- Colocation data centers are increasingly adopting tier 3 and 4 standards. In Taiwan, a significant proportion of data center facilities adhere to these tiers. This is attributed to their robust power and cooling infrastructures, coupled with seamless maintenance procedures that do not necessitate downtime.
- Taiwan's government actively backs digital transformation (DT), positioning itself as a pivotal player in the nation's economic expansion. Initiatives such as the Digital Nation and Innovative Economic Development Program (DIGI+) 2017–2025 are set to propel the market's tier 3 segment during the forecast period.
- The growth of tier 3 data centers in Taiwan is poised to be driven by factors like companies prioritizing high-quality content and advanced graphics for online gaming, alongside a surge in online shopping and digital payment users.
Understand The Key Trends Shaping This Market
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IT and Telecom Segment to Hold Significant Market Share
- Taiwan stands out as a rapidly expanding digital market in the APAC region, bolstered by its close ties to mainland China, robust connectivity, and other key factors. Notably, major players like Apple, Microsoft, and AWS are venturing into Taiwan, setting up data centers and rolling out diverse cloud services.
- As smartphone usage surges in Taiwan, there is a corresponding uptick in the demand for telecom services. The National Communications Commission (NCC) of Taiwan reports that smartphone penetration hit 88.4% in Q1 2024. This rise in digital consumer product usage, especially smartphones, is generating vast amounts of data. Telecom firms are leveraging this data to bolster their storage capabilities, ensuring the company can scale up as needed.
- The increasing demand for high-speed data access, driven by cloud and IoT applications like smart home energy management, is set to propel the adoption of 5G services. With 5G networks boasting superior speeds, enhanced capacity, and reduced latency compared to their 4G LTE counterparts, the subscriber base is expanding rapidly. Notably, in Taiwan, 20% of the population is already utilizing 5G services.
- In Q3 2023, Taiwan led the region with a median 5G download speed of 263.35 Mbps, surpassing nations like Vietnam, China, Hong Kong, the Philippines, and Japan.
- Between 2021 and 2025, the government plans to inject TWD 49 billion (USD 1.8 billion) into the Forward-looking Infrastructure Development Program. This funding aims to bolster efforts in rolling out 5G infrastructure nationwide, with a view to boosting the industry's momentum. Consequently, these initiatives are poised to drive up the demand for data centers in the country.
