Alibaba to Build a Data Center in Vietnam

According to an article in Nikkei Asia, Chinese tech group Alibaba plans to build a data center in Vietnam to store data locally.

"Vietnam is a very potential market"

The Chinese technology group told Nikkei Asia that it is currently renting spaces for computer servers from telecommunications companies Viettel and VNPT. 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. Alibaba also backs up data at clients' request at its own server farms located across the region, from Taiwan to Singapore.

As of April 2024, Alibaba Cloud has 89 data centers in 30 zones around the world. These zones are physical locations that group data centers together and are designed to provide high availability, fault tolerance, and low likelihood of concurrency errors.

As of April 2024, Alibaba Cloud has 89 data centers in 30 zones around the world. (Photo: VNEconomy)

Alibaba Cloud, also known as Alyiun, is a Chinese cloud computing company and a subsidiary of Alibaba Group. Alibaba Cloud provides cloud computing services for Alibaba's e-commerce and online business ecosystem. Alibaba Cloud has four main types of data centers: enterprise data centers, managed services, colocation, and cloud data centers.

Alibaba plans to build a data center in Vietnam to keep pace with demand in one of Asia's fastest-growing economies, Tam said to Nikkei Asia. 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 the interview with Nikkei Asia. "There's a lot of space to grow."

Ensuring better information security and control

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.

Leif Schneider, counsel at law firm Luther said to Nikkei that liability can be an issue when multiple companies are involved in managing the same data.

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. Local companies, meanwhile, share Alibaba's bullish outlook on the market.

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.

Vietnam's data center market is attracting large investments from many domestic and foreign businesses. Technology enterprises such as VNPT, Viettel, CMC, FPT... have recently focused on investing, building, and developing modern, large-scale data centers that meet international standards and provide world-class service.

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