Boom in Data Center Construction driven by AI

Introduction

There are around 10,000 data centers across the globe. Reports have estimated a 10% increase every year in the demand for data centers till 2030. With high data generation due to the advancements in artificial intelligence, no wonder if the actual growth could surpass the estimates.

This article is all about how AI can push the construction of data centers in the coming years. We are here to discuss the aspects of data generation and the growing need for server houses. Let's take a look at how these centers are reaching the secondary market as well.

How AI Has Led to a Surge in Data Creation?

The innovation of artificial intelligence has surely led to a surge in data. Why is this so? Well, AI learns from what is available, which is quite understandable. What's not understandable is that it learns at a very high rate; this means AI needs massive data to learn and evolve constantly. This is where we can join the point that AI has given birth to huge data sets. Any industry or field of work that deploys AI will eventually produce huge data sets. Industries such as healthcare, finance, and retail are at the forefront of generating and utilizing immense datasets to train AI models for various critical applications. These applications range from medical diagnosis and fraud detection to personalized recommendations, illustrating the indispensable role of AI training data in driving innovation and efficiency. The rise of the Internet of Things (IoT) has significantly contributed to the data boom, amplifying the influx of data streams from sensors, wearables, and smart appliances.?

So, where do these giant data sets stay? The answer is data centers. The already existing 10,000 data centers are not enough for such massive data sets. This points out a situation where there is a boom in the construction of big server houses across the globe. We hope a quick forecast of the future through this section has shed light on how AI has and will lead to a surge in data center creation. If you think this is it, then let us tell you that there is more to the growth story. Carry on reading to learn how data center expansion has extended to secondary markets.?

Data Center Expansion Extends to Secondary Markets

We have all read about how Tokyo, Mumbai, Sydney, and so on have been on the front seat of data center growth. But do you know the next level of this expansion story? It is the secondary market that has been fueling the creation of data centers.?

A secondary market refers to a location that is not considered one of the primary or major data center hubs. These secondary markets typically have smaller or emerging data center industries compared to major metropolitan areas. While primary markets like Silicon Valley, New York City, and Northern Virginia are well-established data center hubs with extensive infrastructure and high demand, secondary markets may include smaller cities or regions where data center development is expanding to meet growing demand.?

Why are these big server houses shifting to secondary locations? Take a look at the following points to understand the benefits:

1. Lower Operating Costs: Secondary markets often offer lower operating costs compared to primary market locations. This includes reduced expenses related to real estate, labor, utilities, and other operational expenses. By shifting to secondary markets, companies can optimize their cost structures and improve profitability.
2. Abundant Resources: Secondary markets may have abundant resources such as land, power, and water, which are essential for building and operating data centers. These resources may be more readily available and less expensive in secondary market locations, providing companies with greater flexibility and scalability for their data center infrastructure.
3. Potential Tax Incentives: Many secondary market locations offer attractive tax incentives and economic development incentives to attract investment and stimulate job growth. These incentives may include tax credits, exemptions, grants, and other financial incentives that can significantly reduce the overall cost of establishing and operating data centers in these locations.
4. Cheaper Land: Land costs in secondary market locations are often lower compared to primary market locations, where real estate prices may be prohibitively high. Companies can acquire larger parcels of land at more affordable prices in secondary markets, allowing for the construction of larger and more cost-effective data center facilities.

As per the reports and records, Meta has made a huge investment of $800 million to develop a data center in Indiana (a secondary market location). This infrastructure is strictly dedicated to AI services.

Summing Up

The intersection of artificial intelligence (AI) and data center construction is inevitable. It presents a bright picture of innovation and expansion in the digital era. The surge in data creation driven by AI technologies has necessitated the construction of new data centers to accommodate the growing demand for storage and processing capabilities. Industries such as healthcare, finance, and retail are generating immense datasets to train AI models, while the rise of the Internet of Things (IoT) further amplifies the influx of data streams.

This surge in data creation has prompted the expansion of data center operations into secondary markets, where lower operating costs, abundant resources, potential tax incentives, and cheaper land offer attractive opportunities for investment. Companies like Meta have capitalized on these advantages by investing in secondary market locations to develop dedicated infrastructure for AI services, further driving the growth of data center construction in these regions.