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The Data Center Industry Faces New Obstacles

Internet Network

By Jon HjemboDec 4, 2023

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Recently, we’ve been closely monitoring the intensifying pressures of insatiable demand and supply constraints in key data center markets.

Supply constraints have come in the form of both short-term and long-term challenges.

In the short term, supply chain disruptions have hindered development timelines. On the long-term side, regulators and utility providers have begun taking a hard look at the data center sector and how to grow it sustainably going forward. In some cases, these entities have severely disrupted development during the interim period.

None of these challenges have been resolved. And as we move through 2023, another major disruptive component has been added to the mix—the accelerated growth of generative Artificial Intelligence (AI).

AI will have profound effects on both data center demand and on how data centers will be designed to accommodate vastly more sophisticated operations moving forward.

AI will have profound effects on both data center demand and on how data centers will be designed to accommodate vastly more sophisticated operations moving forward.

Of course, the current pains will ultimately produce positive changes. For one, development across a wider distribution of geographic locations could ease constraints on power and space in hub markets.

It’s also possible that price volatility in the electricity market could spur an even greater focus on the use of energy-efficient equipment. And, ultimately, these disruptions could drive development of sustainable practices across the data center value chain (e.g., liquid-cooled servers, recycling waste heat, use of renewable energy generation, deployment of onsite generation, gray water cooling, and other solutions).

In the meantime, we continue to see rapid expansion of data center and interconnection market infrastructure across the globe, both in core and developing markets.

Network, data center, cloud, and internet exchange operators continue to work together to build new and more widely distributed interconnection nodes.


Our Data Center Research Service is a comprehensive guide for understanding data centers, network storage, and the nature of interconnection.

Download the 2023 Summary of Findings to keep reading this analysis.

 

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Jon Hjembo

Jon Hjembo

Senior Research Manager Jonathan Hjembo joined TeleGeography in 2009 and heads the company’s data center research, tracking capacity development and pricing trends in key global markets. He also specializes in research on international transport and internet infrastructure development, with a particular focus on Eastern Europe, and he maintains the dataset for TeleGeography’s website, internetexchangemap.com.

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