Market Trends of Vietnam Data Center Rack Industry
IT & Telecom segment is expected to account for the highest market share among the end-user industries.
- Following the global trend of cloud technology, the interest of Vietnamese companies and their demand for cloud services are also increasing. Service provider opportunities in IT services include IT technical training and IT consulting, management, software/enterprise applications (ERP and CRM systems, financial and accounting software), data centers and data storage, and web services.
- The country's data center market is driven by the migration of enterprise data to cloud platforms. For instance, in December 2022, Vietnamese conglomerate Vingroup announced its plans to migrate its SAP systems, including supply chain management, enterprise resource planning (ERP), finance management, human capital management (HCM), and manufacturing operations, in its on-premise data centers to Google Cloud to boost its production capabilities and improve product and service quality. Such developments are expected to increase the adoption of data storage solutions and positively impact the market.
- The telecom segment also witnessed significant growth of 5.48% during the study period. Many telecom operators aim to increase their offerings and expand their presence nationwide amid the growing internet users and economy. For instance, Viettel IDC plans to invest in 4G and 5G infrastructure and fiber optic connectivity for every household by 2025.
- The rollout of 5G networks is expected to boost the region's digital economy and increase the demand for high-bandwidth network infrastructure. For instance, in December 2022, AMD announced the successful completion of a 5G mobile network field trial with Viettel Group's R&D arm Viettel High Tech (VHT). AMD supplied its Xilinx Zynq UltraScale+ MPSoC devices for the trial, part of Viettel's plan to complete its 5G network in Vietnam by the end of 2022. Such developments in the market are expected to create more need for data storage space and raise the demand for data center racks in the coming years.
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Full Rack is Expected to Grow Significantly
- In Vietnam, due to growing space scarcity between various companies, the full rack has a majority of the market share. In order to cope with increasing rack capacity due to the rapid growth of mobile broadband, e-commerce, and the increase in Big Data Analytics combined with cloud computing, it is necessary to build a fully rack-equipped data center.
- Foreign direct investments continued in Vietnam's e-commerce sector in 2022. Companies from China, Japan, South Korea, and the United States expanded their digital presence on local e-commerce platforms. Vietnam also has a stronghold on five of Southeast Asia's most successful e-commerce platforms, namely Lazada, Shopee, Tiki, Sendo, and The Gioi Di Dong. With the adoption of new technologies and stronger digital infrastructure, the year 2022 was the beginning of a new era of e-commerce in Vietnam. Such instances are expected to create more need for full racks in the coming years.
- At first, there was a limited focus on rack space in data centers; only size and cost were taken into account during deployment. Nevertheless, there is an opportunity for increased use of rack space in the data center as more and more users from different sectors such as online banking, telecommunications, media and entertainment, and others are adopting applications with higher density.
- Further, Companies increasingly rely on data centers for efficient management of their databases and storage, as they generate significant amounts of data every day. The main driving factor for data center rack usage is, therefore, the increased deployment of fully configured data centers. Also, the growth of the market is being influenced by the growing demand for IT services and investments made by large companies and by the local government.
- Recently, Vietnam approved the National Digital Transformation Programme by 2025, with an orientation toward 2030. To meet the targets, the Ministry of Planning and Investment (MPI) will issue documents and tools guiding the digital transformation and boost cooperation with relevant agencies, including a roadmap for production facilities and offering them a 50% reduction in consultancy costs. Such developments in the market are expected to create more demand for data center racks across the region.
