This research report on the data center market in Latin America covers sizing and forecast, share, industry trends, growth drivers, and vendor analysis. The study includes insights on the segmentation by IT Infrastructure (servers, storage, and network) Electrical Infrastructure (uninterruptible power supply (UPS) systems, generators, rack power distribution units (PDU), transfer switches & switchgears, and other), Mechanical Infrastructure (cooling systems (CRAC & CRAH units, chiller units, cooling towers, dry coolers & condensers, and other cooling units), racks, and Other mechanical infrastructure), General Construction (building development, installation and commissioning services, building designs, physical security, data center infrastructure management (DCIM) & building management systems (BMS)), Tier Standards (Tier I and II, Tier III, and Tier IV), and Geography (Brazil, Chile, Colombia, and Rest of Latin America).
The digitalization of the business environment is driving the data center market in Latin America. Around one-third of the population adopted smart devices in 2019, which has led to the growth of internet-based service consumption, i.e. adoption of cloud-based services in the region. Moreover, the growing adoption of data center services in sectors such as media and entertainment, BFSI, government agencies is boosting the demand for colocation facilities. Enterprises, colocation service providers, and telecommunication service providers are also significantly contributing to data center investments in Latin America. Hence, the increased investment from cloud-based service providers is likely to influence the Latin America data center market.
In Latin America, the most start-ups across FinTech, AgTech, and eCommerce business verticals are involved in using big data analytics and IoT applications. Brazil dominates the big data market, followed by Mexico and Colombia. The high adoption of cloud computing, big data, and IoT services, along with the growth in social networking and demand for online video services, has prompted telecommunication providers, enterprises, and government agencies in the region to strengthen their internet backbone. In 2019, Google landed its private submarine cable, Curie, in Valparaíso, Chile. The cable is directly connected to the Equinix LA4 data center in Los Angeles, California. About 10 submarine cable projects expected to be operational by 2021, will bring in high data center investments year-over-year.
The Latin America data center market is expected to grow at a CAGR of over 6% during the period 2019–2025.
This research report includes a detailed segmentation by IT infrastructure, electrical infrastructure, mechanical infrastructure, general construction, tier standards, and geography.
Insights by IT Infrastructure
IT spending in Latin America is growing significantly YOY. The growth is majorly driven by enterprises shifting from on-premise IT infrastructure to colocation. Enterprises are more concerned about the availability of support services such as reliable power, cooling system efficiency, high-speed connectivity, and security. These concerns are driving enterprises to adopt colocation and cloud-based services. The server market is expected to grow during the forecast period due to the increasing investment from cloud providers such as AWS, Google.
All-flash-arrays are expected to be replace traditional storage drives as a primary source of storage in the Latin America region data center during the forecast period. The increase in usage of internet, smartphone adoption, IoT, and big data analytics has raised the demand for IT infrastructure in the region. The number of application workloads instances in the cloud, as well as on-premise, will grow by 2.5X by 2025. The incorporation of 5G and improvement towards fixed broadband connectivity will fuel the demand for HPC infrastructure by 2025. While the use of HDD-based arrays is present in several data centers, the demand is declining YOY and is getting replaced by fast, reliable, and non-volatile storage solutions. The adoption of NVMe SSDs will gain traction in leading markets such as Brazil, Chile, and Colombia.
Insights by Electrical Infrastructure
The Latin America data center market has a strong potential for UPS systems due to the increasing greenfield facility developments, especially greater than 10 MW. Several facilities are being developed based on Tier III standards for design and operations with a minimum of N+1 redundancy on UPS systems. The emergence of lithium-ion battery systems is expected to influence market growth.
The adoption of generators of capacity over 2 MW is growing in Latin America. The service providers in Latin American countries continue to invest more in N+N redundant generators rather than N+1 or 2N for power distribution and UPS systems. The market for transfer switches and switchgear is expected to grow due to the increased data center construction. However, the use of switches will vary significantly based on capacity supported, cost, mean time between failures (MTF), switching time, and design. With the increased construction of data centers typically of more than 5 MW capacity, the market for medium-voltage switchgears is expected to grow significantly.
Insights by Mechanical Infrastructure
Several facilities in Brazil are commonly utilizing water-based cooling systems. Some parts of Brazil also offer the climatic benefit of adopting free cooling and air-based cooling techniques. The large data center development in Brazil during the forecast period is expected to adopt systems that support free cooling.
In Chile, most facilities use chilled water systems with CRAH units, free cooling units with CRAC units, or free cooling chillers. The increasing adoption of free cooling in Chile is likely to reduce cooling energy consumption by up to 30% during the forecast period. Also, the growing construction of modular and colocation facilities in Chile is projected to fuel the demand for mechanical infrastructure in the region.
Many facilities in Colombia are equipped with a minimum cooling redundancy of N+1 configuration. The growth of rack power density will prompt providers to adopt innovative cooling solutions such as evaporative coolers to facilitate free cooling solutions. The use of water-based cooling solutions will dominate other Latin American markets, including Peru, Argentina, Uruguay, Mexico, and the Caribbean.
Insights by General Construction
Most data center development in Brazil during the forecast period is expected to be greenfield. The market has a strong potential for growth for modular projects. In Chile, a majority of the construction contractors are generally involved in the development of greenfield and modular facilities. With the market operating data centers of IBM and Google, the country is likely to witness the opening of a few additional Tier IV facilities with high operational sustainability. The data center construction market in Colombia involves the adoption of greenfield developments and modular facilities. Greenfield developments are carried out by colocation and telecommunication service providers.
In terms of physical security, the facilities in Brazil are secured with multiple layers of physical security against any physical threats and intrusions. The use of infrastructure-based monitoring is high in the market, where integrated facility monitoring is expected to grow during the forecast period. The use of infrastructure-based monitoring is high in Chile, where integrated facility monitoring is expected to grow during the forecast period.
Insights by Tier Standards
Tier I data centers exist in the North American region. According to the Uptime Institute, there are around two facilities in Latin America that are Tier II certified based on designing and construction. In these facilities, redundancy is recognized between UPS and PDU systems. Other infrastructures are identified to be working through the single delivery path with no redundancy in most cases; this includes piping of data center cooling systems. However, with the increased awareness of redundant infrastructure, the number of Tier I facilities in Latin America have decreased considerably in the last five years.
Most facilities in Brazil, Colombia, Chile, Argentina, Mexico, and Peru are certified as Tier III. Several new facilities are being designed as per Tier III standards with a minimum of N+1 redundancy; however, they can be reconfigured with up to 2N+1 redundancy as and when the demand arises. These operators are expected to shift to Tier IV design standard facilitating flexible design as per customer demand.
Tier IV data centers facilities are in Brazil, Colombia, Chile, Mexico, Uruguay, and Ecuador in Latin America. Tier IV facilities are equipped with at least 2N+1 redundancy in every infrastructure that makes the facility fault-tolerant, with some facilities having 2N+2 redundancy in few critical infrastructures such as UPS systems and PDUs. The contribution of hyperscale developers such as Google and AWS is aimed at making a facility that is fully fault-tolerant to provide customers with satisfaction while connecting with cloud-based services in a region.
Insights by Geography
Brazil is the leading country with the highest number of facilities. With the increasing internet penetration, the use of cloud-based services by businesses is growing. In Brazil, there were about 13 new facilities opened or under-construction projects and are likely to be operational by 2019. Cloud service providers such as Alibaba is also planning to launch its cloud computing service in Brazil. Alibaba has identified a local partner known as UOL Diveo that will resell its cloud services in Brazil. In Brazil, Sao Paulo is the state with the majority of investment from Ascenty, Equinix, UOL DIVEO. Rio de Janeiro is also preferred by colocation service providers such as Ascenty and Centurylink.
Chile has been witnessing growth in data centers development in recent years due to the demand for cloud-based services, the internet of things (IoT), and big data analytics the increasing submarine cable deployments in Chile, the data center construction market is growing rapidly. For instance, Huawei is expected to build a 2,800-kilometer subsea cable project in Chile in partnership with Communications and Rural Telephony (CTR). Colocation and telecommunication service providers are the major contributor to the Chile market. Ascenty is one of the leading operators in Latin America and is investing in its first facility in Chile. Ascenty is expected to expand its presence in the country with Google boosting the market growth through additional investments.
Colombia has emerged as a booming market for the construction of data centers in Latin America. In terms of investment, colocation providers are dominating the market. Bogota is the most preferred location for data center development.
Key Vendor Analysis
The data center construction market in Latin America is continuing to grow in terms of greenfield, brownfield, and modular data center construction. The market is still witnessing increased growth in the number of facilities across all regions, with a high adoption of efficient and modular data center infrastructure solutions. The market has a strong presence of vendors across all three categories, such as electrical infrastructure, mechanical infrastructure, and general construction.
Prominent (IT) Infrastructure Providers
Prominent Support Infrastructure Providers
Prominent Construction Contractors
Prominent Data Center Investors
Other Prominent IT Infrastructure Providers – Arista, Broadcom, Juniper, Lenovo, NetApp, Oracle, Pure Storage
Other Prominent Construction Contractors - Fluor Corporation, Holder Construction, Jacobs Engineering Group, Mortenson Construction
Other Prominent Infrastructure Providers - Active Power (Piller Power Systems), Alfa Laval, Assa Abloy, Axis Communications, Bosch Security Systems (Robert Bosch), Caterpillar, Cisco, Cummins, Daikin Applied (Daikin Industries), Delta Group, Generac Power System, Honeywell International, Legrand, Mitsubishi, Munters, Panduit, Siemens
Other Prominent Data Center Investors – EdgeConnex, GTD Group, Telefonica
Key Market Insights Include
The report provides the following insights into the data center market in Latin America during the forecast period 2020–2025.
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