A massive hurdle is preventing Asia’s tech hubs and data centers from capitalizing on the current artificial intelligence (AI) boom. These hubs are struggling to meet ever-increasing energy demands while also transitioning to green energy.
Tech companies across the continent are trying to reduce carbon emissions and keep chip production on track, while dealing with shifting supply chains.
This balancing act now threatens to derail industry growth in the region, according to a recent report by Nikkei Asia.
The AI Crunch and green energy
The rise of AI is exacerbating the scramble for renewable power supplies across Asia.
Why? Data centers from Taiwan to Vietnam to Malaysia – coupled with the demand for advanced chip production – require massive amounts of energy.
Deputy chair of Taiwan’s presidential office climate change response committee, T.H. Tung, tells Nikkei Asia that Taiwan might “lose its hard-earned advantages,” if the preparation for low-emission power supplies isn’t prioritized.
“If we don’t prepare low-emission power supplies, I fear Taiwan will lose its hard-earned advantages,” warns Tung.
This would be a massive blow to the country. Taiwan is home to several tech giants – Pegatron, Taiwan Semiconductor Manufacturing Company (TSMC) Foxconn (the world’s top contract chip manufacturer), to name a few.
“TSMC’s cutting-edge chip production technologies, the booming EV industry and Taiwanese suppliers’ strong positions in the AI supply chain—these are symbols of a modernized economy and critical to Taiwan’s competitiveness,” Tung says.
Green energy realities
The numbers are staggering. According to the data, the energy demand from data centres is expected to rise over 300% between 2024 and 2030, reaching up to 6.5 gigawatts.
To make matters worse, AI server manufacturing consumes five times more power than traditional servers, while an eight-hour AI server rack ‘burn test’ uses the same amount of electricity as a Taiwanese household does over the span of three months.
Meanwhile, Taiwan still heavily relies on fossil fuels for almost 80% of its energy demand. Renewables, unfortunately, only account for 10%.
In Vietnam, residents and businesses constantly deal with power outages and an unstable energy grid. This despite the country generating more than 40% of its energy from renewables.
Singapore had to put the construction of a new data center on hold, mainly due to environmental concerns. This robbed the country of its reputation as being a leading tech hub in Asia.
The situation is dire. An executive at an Apple supplier told Nikkei Asia that carbon emissions aren’t even a priority – not when they “suffer some 10 or even 20 power trips a month in Southeast Asia.”
The road towards a green future
With the current situation only escalating, tech companies and governments are trying to right the green energy wrongs. Foxconn is lobbying governments to focus on green supply and infrastructure.
Meanwhile, Delta Electronics is building its solar power plants in India and Thailand, and Malaysia is allowing private renewable energy suppliers to negotiate directly with companies, reducing unnecessary red tape and liberalizing the process.
There is a green lining. It usually takes up to 13 years to build an offshore wind farm in Europe. In Taiwan, it can be done within eight years, Marina Hsu of Copenhagen Infrastructure Service told Taiwan Business Topics in 2021.
The region’s tech aspirations now depend on how quickly and effectively countries in Southeast Asia can transition to renewable energy.
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About the author
Cheryl has contributed to various international publications, with a fervor for data and technology. She explores the intersection of emerging tech trends with logistics, focusing on how digital innovations are reshaping industries on a global scale. When she's not dissecting the latest developments in AI-driven innovation and digital solutions, Cheryl can be found gaming, kickboxing, or navigating the novel niches of consumer gadgetry.