Alibaba to build Vietnam data center to follow local storage law

Alibaba plans to build a data center in Vietnam to store data locally in compliance with legal requirements, while it currently relies on government-owned facilities.

Alibaba’s decision to build Vietnam data center

The Chinese tech group told Nikkei Asia that for now it rents space for computer servers from telecommunications companies Viettel and VNPT, providing one example of how companies have responded since a Decree 53 on Cybersecurity law took effect in 2022, which forces businesses to keep local data in the country. As a result, businesses have been looking for cross-border options.

Dang Minh Tam, solution architect lead at Alibaba Cloud, said the company uses colocation – a term for renting out space from data center operators – partnering with the two state companies to park client data locally. But it also backs up data at clients’ request at its own server farms located across the region, from Indonesia to Singapore.

Alibaba plans to build a data center in Vietnam to keep pace with demand in one of Asia’s fastest-growing economies, Tam said. He said he did not yet know the cost and declined to give a timeline for the project, as the details have not been made public. The cost of building a data center can exceed $1 billion.

“Vietnam is a very high potential market,” Tam said in an interview. “There’s a lot of space to grow.”

One reason companies like Alibaba might want to build their own servers, in addition to cost considerations, is to ensure greater security and control over their information.

Liability can be an issue when multiple companies are involved in managing the same data, said Leif Schneider, counsel at law firm Luther. Contracts must be clear “so you always know who bears what risk and responsibility,” he said at a cloud and data center conference in Ho Chi Minh City last week.

Vietnam is on more tech giants’ radar

Leaders of big technology corporations such as Nvidia, Apple, and Lam Research have recently been actively promoting opportunities for cooperation with Vietnam to diversify their supply chain bases amidst increasing political tensions between the US and China.

Specifically, Nvidia aims to work with relevant central and local agencies to prepare for three major projects: establishing a Research, Development, and Training Center for Artificial Intelligence (AI); installing supercomputer systems; and transferring a portion of the production of Graphics Processing Units (GPUs) for supercomputers to Vietnam.

In a meeting with Prime Minister Pham Minh Chinh in mid-April, Apple CEO Tim Cook pledged to purchase more components from manufacturing partners in Vietnam, while also supporting Vietnam in innovation and creativity.

Apple seeks to increase spending on suppliers in Vietnam and expand vocational training programs for people with disabilities to promote inclusion, providing greater opportunities for them in the supply chain.

The US semiconductor corporation Lam Research also plans to collaborate with South Korea’s Seojin Group to develop a factory and supply chain in Phase 1 with an investment of 1-2 billion USD in Vietnam. After this phase, the corporation may invest directly to expand operations in Vietnam.

The key to opportunity

In order to seize this golden opportunity, Vietnam needs to put in more effort in creating a sustainable business environment.

Viettel IDC, run by Vietnam’s military, told Nikkei that its customers from Alibaba to Microsoft are demanding environmental, social and governance (ESG) improvements.

It calls its approach “ESGT,” with the added use of technology. For example, tech can be used to track and optimize water use, which is used to keep computers cool and can rack up big costs. Viettel does not currently use much renewable energy but is aiming to make renewables count for 30% of its power consumption by 2030, said technical department manager Nguyen Dinh Tuan.

“We need to prepare for the data center boom,” he said in an interview. “We need to prepare for the sustainability trend.”

Viettel projects the Southeast Asian country’s data center market will expand 15% a year for the foreseeable future, and likely more if a big cloud company like Alibaba invests there.

Source: Redsunland

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