MARKET OUTLOOK

The Latin America data center market will witness investments of USD 8.81 billion by 2028, growing at a CAGR of 8.14% from 2023 to 2028. The rise in coverage of 5G and its deployment in the region will attract more edge data center investment across the region. The deployment of submarine cables, such as the Caribbean Express (CX cable) and Firmina cable, will help the region to establish a better connection with the rest of the world.

KEY TRENDS

Adoption of Renewable Energy

• Many Latin American countries, including Brazil, Chile, Mexico, Argentina, and Peru, work on diversifying electrical systems and enabling policy and regulatory changes conducive to renewable energy production and adoption.
• In April 2022, HostDime, a Brazilian operator, announced that it would power its facility using 100% solar energy, investing around USD 1.2 million in the solar power farm.
• Chile has a favorable climate for renewable energy. The country’s renewable energy production is dominated by solar energy due to the multiple renewable solar energy projects.
• In January 2022, Microsoft announced plans to develop a cloud region in Chile at an investment of over USD 315 million. The cloud region will be powered by 100% renewable energy.

Implementation of Automation & Artificial Intelligence in Data Centers

• In November 2022, GENIA Latinomerica announced that it introduced LATAM 4.0, the fourth industrial revolution across Latin America. It will promote AI and automation.
• Latin American countries identify the benefit of using DCIM systems to monitor and automate their new data centers to overcome potential future challenges. Most vendors in the Latin America data center market that provide power infrastructure invest in software systems, such as StruxureWare from Schneider Electric, Trellis from Vertiv, and the Ability Automation platform from ABB, that track power infrastructure.
• Ascenty’s data centers are equipped with automation solutions, where support infrastructure is monitored continuously to reduce outages due to power and equipment failures. ODATA is also equipped with monitoring solutions: ITSM and BMS systems.

Edge Data Center Deployment Fueled by 5G Launch

• 5G is already launched in Mexico, Brazil, and Chile, while Columbia and Argentina are running tests for 5G technology. The growth of this technology will influence the network as it will increase the amount of data processed within the servers.
• In September 2022, UOL formed Edge UOL and announced a collaboration with DigitalBridge’s Scala Data Centers and AWS to explore the opportunity for edge computing.
• By 2035, Brazil will see economic growth of over USD 1 trillion due to the deployment of 5G technology, according to Nokia. 5G implementation will also drive the deployment of more edge data centers across the country, especially in Tier II and Tier III states.
• In February 2022, the IFT granted permission to Telcel, the arm of América Móvil, to launch 5G network services in 18 cities across Mexico, which have around 48 million consumers.

SEGMENTATION INSIGHTS

• The strategy of Multi-cloud is adopting multiple cloud services from single or multiple vendors that operate in the Latin America data center market – for instance, using Amazon Web Services for application workloads and Microsoft Azure for enterprise databases.
• The higher rack power density, powerful infrastructure, and increase in high-performance computing led to innovations by vendors in new designs and types of racks.
• Vendors in the Latin America data center market continuously innovate with UPS solutions to increase efficiency and reduce costs. There is an increased interest among facilities to procure UPS systems of more than 750 kVA.
• The introduction of hydrogen fuel cells and natural gas-based fire suppression systems will lead to a reduction in water consumption levels. It will help operators to increase the sustainability and efficiency of data centers.

GEOGRAPHICAL ANALYSIS

• Brazil is among the top destinations in the Latin America data center market. AWS, Microsoft, Oracle, IBM, Tencent Cloud, Google, and Huawei Technologies are the major cloud service providers in the country. The country also witnesses investments in the establishment of new cloud regions. For instance, Google plans to open a new cloud region and engineering center in São Paulo in 2023.
• In May 2022, ODATA announced that it launched a data center in Mexico, the company's first in the region. It invested around USD 75.43 million in this project.
• Santiago is an emerging data center hub in the country as it experiences investments from major data center operators. Most data center operators in Chile, such as ODATA, Ascenty, and EdgeConneX, operate data center facilities in Santiago to encourage, promote, and coordinate investments. There are two upcoming data centers in the country.
• Colombia has the presence of both colocation and hyperscale data center providers. HostDime, Equinix, GlobeNet, and Scala Data Centers are some colocation data center operators in the country. Huawei Technologies and Microsoft are hyperscale service providers that have a presence in the country.
• The other Latin American countries include Argentina, Ecuador, Peru, Venezuela, Uruguay, Nicaragua, Paraguay, Bolivia, Honduras, and the Caribbean. In 2022, Gtd Peru announced plans to build a second Lima data center facility in Peru.

VENDOR LANDSCAPE

• The Latin America data center market has the presence of several participants/vendors that are active in the region, which is leading to the growth of the market. The vendors offering innovative and advanced technologies will likely gain a higher market share during the forecast period.
• Some of the top IT and support 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, ABB, Caterpillar, Cummins, Eaton, Legrand, Schneider Electric, Vertiv, STULZ, Rolls Royce Power Systems, Siemens, Delta Electronics, and others.
• The top colocation operators in expanding and developing regional facilities include Equinix, Ascenty, ODATA, Scala Data Centers, HostDime, EdgeConneX, Lumen Technologies, Ava Telecom, and KIO Networks.