Asian AI Ambitions Stalled by Data Center Capacity Gap

Asian economies are struggling to meet their artificial intelligence goals as a significant gap emerges between announced data center capacity and actual delivery. In 2024, the region delivered only 38% of its projected capacity, a shortfall driven by inadequate grid infrastructure, storage deficits, and local regulatory hurdles.

The Government of Japan has earmarked over 90 trillion yen for AI and chips as part of a broader 370 trillion yen budget over 15 years. However, regional progress is hampered by specific local restrictions, such as a ban on Tier 1 and 2 facilities in Johor, Malaysia, due to water infrastructure concerns. India is similarly facing severe grid delivery lags that threaten its goal of doubling projected data center capacity.

To attract investment and avoid the project delays currently affecting the United States, experts suggest that Asia must liberalize state-owned, vertically integrated electricity markets. This shift would allow for transparent price competition and derivatives trading. Some progress has been made through the Indian Energy Exchange and the development of power futures markets in Japan, where firms like Marex are providing liquidity.