Latin America Data Center Market Landscape 2024-2029

MARKET OUTLOOK

The Latin America data center market will witness investments of USD 10.06 billion by 2029, growing at a CAGR of 7.95% during the forecast period. The market has been growing significantly, with the major contributions coming from countries such as Brazil, Mexico, Colombia, and Chile. In 2023, the Latin America data center market witnessed cloud data center investments from major cloud operators such as Microsoft and Google. In addition, other local cloud companies, such as Teccloud and Vultr, are investing in expanding their cloud data centers in the region.

KEY TRENDS

Adoption of Renewable Energy

• Latin American governments, such as Brazil, Chile, Mexico, and Colombia, have set sustainability targets. They are working together to diversify their electrical networks to support the policy and regulatory changes that encourage using renewable energy sources. Brazil, Chile, and Mexico have tremendous influence among neighboring countries, allowing them to present their renewable energy policies as viable models for the other countries in the region.
• According to the 2023 bp Energy Outlook, renewables, including biofuels, will be Brazil’s dominant energy source in 2050. Wind energy is expected to provide around 30% of renewable energy share and to increase by 40% for net zero scenarios.
• According to the National Renewable Energy Laboratory (NREL), Mexico aims to generate a minimum of 35% of its electricity from clean energy sources by 2024. 
• In September 2023, Microsoft Brazil signed a 15-year Power Purchase Agreement (PPA) with AES Brasil, a renewable energy company, to procure 150 MW of wind energy.      

Deployment of Artificial Intelligence (AI) workloads in Data Centers

• In Latin America, Brazil, Chile, Colombia, and Mexico are the countries with the highest AI adoption rates and most significant technology investments.
• Microsoft is currently developing a new data center/cloud region in Chile. The company entered into an agreement with the European Southern Observatory (ESO) to use AI and is already exploring AI technology in its operations in other countries. The company is estimated to use AI in its data center/cloud regions in Chile in the future.
• In January 2024, Petrobras, a Brazilian oil & gas company, established Gaia, a new supercomputer in the Petrobras Development and Innovation Research Center (Cenpes) in Rio de Janeiro. Gaia has been equipped with a 7.7 petaflops machine from Dell.
• In September 2023, Colombian environmental organizations collaborated with the Alexander von Humboldt Institute and Microsoft AI for Good Lab on Project Guacamaya. This project uses AI technology, including Microsoft’s AI technology, to analyze satellite data, thereby tackling deforestation and promoting biodiversity in the Amazon rainforest.

Edge Data Center Deployment Fueled by 5G Launch

• In Latin America, 5G will account for nearly 60% of the total mobile connections by 2030. The deployment of 5G networks is fueling modern edge devices, remote working, and the application of advanced technologies. Brazil is leading the way in 5G technology deployments. Other countries, including Mexico, Argentina, Colombia, and Peru, are in the trial stage.
• According to Nokia, Brazil's 5 G deployment will drive economic growth of over USD 1 trillion by 2035. 5G implementation will also drive the deployment of more edge data centers across the country, especially in Tier II and Tier III states.
• In December 2023, Colombia’s Ministry of Information Technologies and Communications (MinTIC) authorized Claro, Partners Telecom Colombia (WOM), Union Temporal Colombia Móvil-Telefónica, and Sociedad Futura Telecall Colombia to participate in the 5G auction, which is expected to generate around USD 500 million.
• In November 2023, Brisanet, one of Brazil's major telecom service providers, decided to commercialize its 80-edge data centers to manage network connectivity.

SEGMENTATION INSIGHTS

• The Latin America data center market is increasingly adopting advanced air—and liquid-based cooling techniques. This includes innovations such as liquid-based immersion cooling and Google's incorporation of inventive air conditioning technology in its latest data center in Uruguay.
• Eaton, Caterpillar, Cummins, Legrand, ABB, Rolls Royce, and Schneider Electric are some of the major electrical infrastructure providers in Latin America that are collaborating with data center operators for installing electrical infrastructure, such as UPS systems and generators, with a minimum of N+1 redundancy. For instance, the KIO Networks BOG 1 data center facility is installed with Cummins diesel generators.
• Data centers are investing in cooling infrastructure due to the high-temperature climate in some Latin American countries. In 2023, cooling systems will account for a market share of more than 65% of the total mechanical infrastructure in data centers.
• There has been significant growth in establishing data centers in the Latin American data center market, specifically in the Tier III and IV certification categories. Many private and public entities, such as BFSI, education, and the government sector, are obtaining the Uptime Institute certifications for their data centers, either in the design phase or completely developed. This demonstrates a strong commitment to high reliability and operational excellence in data center infrastructure.

GEOGRAPHICAL ANALYSIS

• Brazil led the Latin America data center market in 2023, accounting for over 40% of the market share in investments. Mexico, Chile, Colombia, and Argentina followed this country.
• In the Latin America data center market, several countries are actively establishing Special Economic Zones (SEZs), Free Trade Zones (FTZs), Export Processing Zones (EPZs), business parks, and industrial zones, which provide attractive benefits such as tax incentives for international businesses.
• In 2023, Google started the construction of the Teros data center facility in Uruguay. The company acquired a property of around 30 hectares within the Parque de las Ciencias Free Trade Zone (FTZ) in the Canelones department of Uruguay.
• The other countries in the Latin America data center market include Peru, Ecuador, Venezuela, Uruguay, Nicaragua, Paraguay, Bolivia, Honduras, and the Caribbean.

VENDOR LANDSCAPE

• The market has several participants/vendors active in the Latin America data center market, leading to market growth. The vendors offering innovative and advanced technologies will likely gain a higher market share during the forecast period.
• Some top IT infrastructure providers active in the Latin America data center market include Arista Networks, Broadcom, Cisco Systems, Hewlett Packard Enterprise, Huawei Technologies, Dell Technologies, IBM, NetApp, and others.
• Vendors, including ABB, Vertiv, Schneider Electric, Caterpillar, Johnson Controls, Eaton, Cummins, Rittal, and Delta Electronics, are some of the support infrastructure vendors that account for a huge worldwide presence, including operations in the Latin American region. Most vendors operate through subsidiaries, distributors, and local regional partners.
• AECOM, Aceco TI, Afonso França Engenharia, Fluor Corporation, Jacobs Engineering, Constructora Sudamericana, Quark, Zeittec, Modular Data Centers, Soben, KMD Architects, Syska Hennessey Group, Quark, Gensler, Turner Construction, and ZFB Group are some of the key players in Latin American data center construction market. For instance, Afonso França Engenharia is involved in the ODATA RJ1 data center phase expansion in Rio de Janeiro as well as the development of the CloudHQ data center campus in Paulinia and the V.tal data centers in Fortaleza and Porto Alegre.
• In the Latin America data center market, Ascenty (Digital Realty), ODATA (Aligned Data Centers), Equinix, HostDime, CloudHQ, Scala Data Centers, KIO Networks, EdgeConneX, Angola Cables, Cirion Technologies, and V.tal are some of the colocation operators investing in the development of multiple data center facilities in 2023.
• New entrants in the Latin America data center market, such as Layer 9 Data Centers, Surfix Data Centers, CloudHQ, and DHAmericas, are investing in developing new regional data center facilities.