China's data centers fight for survival: Where is the demand?

China's data centers fight for survival: Where is the demand?

The data center industry in China is currently a hot topic, because many freshly built data centers are unused. The alarming numbers bring a breath of fresh air to the industry; The National Development and Reform Commission (NDRC) has set itself the goal of bringing at least 60% of the existing data centers online by the end of the year. This seems almost like a race against the time, because the AI ​​boom, a significant initiated by the introduction of Chatgpt in 2022, caused a brief upswing, but sustainable demand falls by the wayside. Sixth Tone reports that a flood of new data center projects was announced from March 2023, whereby over 500 projects are launched and many institutes focus on the development of AI models.

A decisive initiative in this context is "Eastern Data Western Computing", which was launched by NDRC in 2021. This measure aims to strengthen China's technology industry and shift resources from the crowded urban centers to the east of the country to the western provinces. Ten cloud computing hubs are to be created here, and the estimated investment costs amount to around 400 billion yuan (around $ 56 billion). This is not just a massive economic effort; It should also create high -quality jobs in lesser -developed regions.

gigantic investments and challenges

In within just two years, the state has invested well over 6 billion USD within the framework of the "Eastern Data, Western Computing" program. Liu Liehong, the director of the National Data Bureau, announced the numbers during the Big Data Expo in Guizhou, another important location for data centers. It is particularly striking that most urban hub locations in China are on the crowded east coast, while the western provinces are considered ideal locations for building new data centers due to the large open areas and energy sources. The construction costs in Beijing are currently ten times higher than in the western provinces, which also underlines the problem.

Despite all investments and ongoing projects, there is growing resentment about the unused capacities. Tom’s Hardware inform us that it is time to think about alternative applications for this infrastructure. Is the opportunity to transfer unused data centers for new services in cloud computing, green technology, gaming or manufacture? In some places, the need for specific computing power is simply not big enough.

the look into the future

What's next? China's cloud computing market faces enormous growth opportunities. It is predicted that the market for public clouds increases from USD 32 billion to $ 90 billion by 2025. The growing demand for cloud solutions is strongly driven by the e-commerce industry and industrial companies. Any tips, such as those can be observed in the singles' Day, require a robust cloud infrastructure that has grown to the volume of demand. In less than five years, 32% of IT workloads in the industrial sector should hike to the cloud, while transport and logistics should also attract 26%, such as McKinsey explained.

In order to achieve these promising goals, not only creative solutions are required, but also concrete strategies. Companies often prefer to rely on individual payment options for IT costs instead of relying on monthly payment models. In addition, surveys show that a large part of the respondents are aiming for a partnership with several cloud service providers, which significantly increases the potential for competition and innovation in the industry.