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APAC data center capacity has been rising at a 27% CAGR over the past five years and is expected to grow even faster over the next three years. The key question is whether demand will keep pace or if we are facing a short-term overbuild similar to past instances in China or the early 2000s fiber boom. Which countries are best positioned in this evolving landscape?

We forecast a strong demand CAGR of over 20% for 2024-2030, driven by increasing cloud migration, fueled by AI, along with an AI multiplier of over 2x. Our top-down demand analysis considers GDP growth, cloud infrastructure demand, AI demand, and cloud penetration, adjusted for country-specific factors like land availability, energy supply, and government policy/regulations. We expect a supply CAGR of 17-18% during the same period, with a 16% probability of an APAC data center supply glut. Among countries, China is most likely to experience a supply glut, while Singapore, Malaysia, and South Korea data center operators appear best positioned, considering demand, supply, power constraints, and valuation.

Given rising data center demand, some countries may face power constraints, particularly Japan and India. This presents investment opportunities for the power supply chain, including power grid, transformer, stable system, diesel generator, and liquid cooling. Liquid cooling and stable systems appear more attractive than data center operators/developers, while power generator, chemical materials, grid operator, gas turbine, and transformer are less attractive.