Malaysia Remains Key Data Centre Hub Despite Global Concerns – MIDF
KUALA LUMPUR, Jan 31 (Bernama) – Malaysia remains a key data centre (DC) hub due to its strategic location, abundant resources, cost advantages, and established infrastructure with industry feedback suggesting no major disruptions to upcoming projects, according to MIDF Amanah Investment Bank Bhd.
In a research note, the bank said that regardless of recent volatility in Malaysia’s construction sector, particularly in stocks like Gamuda Bhd and Sunway Construction Group Bhd which stemmed from concerns over the artificial intelligence (AI) chip restriction implemented by the Biden administration.
“This policy restricts United States (US) data operators from deploying more than seven per cent of their processing power in Tier 2 countries like Malaysia and caps the usage of graphics processing units (GPUs) to 50,000 per facility. This has sparked fears that large-scale DC investments in Malaysia could slow,” it said.
The bank noted that these concerns were compounded by Donald Trump’s Stargate initiative, a US$500 billion plan backed by Microsoft and Meta to expand DCs in the US, which further shook market confidence in Malaysia’s role as a global data centre hub.
However, MIDF believes that these fears may be overstated, and argues that Malaysia remains a prime location for data centres, especially considering that the feasibility of consolidating all data centres in the US is highly questionable, given the massive energy and cooling requirements.
Moreover, the rise of DeepSeek—a Chinese AI model reportedly achieving ChatGPT-level performance using only 2,000 H-800 Nvidia chips (compared to ChatGPT’s approximate 11,000 H-100 chips, which are more advanced)—could nullify the impact of the AI chip ban.
If DeepSeek’s efficiency claims hold, US firms would achieve the same processing power using far fewer GPUs, meaning the 50,000 GPU limit would allow for multiple data centres in Malaysia or an expansion of current data centres.
“Overall, we opine that the sharp selloff in Malaysian construction stocks may be overdone. If DeepSeek’s efficiency claims are valid, the AI chip restriction will be moderated, reaffirming Malaysia’s role as a cost-effective, strategically located DC hub,” it said.
As clarity emerges, the bank expects confidence in construction stocks to rebound in the coming months, reinforcing the sector’s long-term strength.
MIDF also noted that if efficiency increases, Malaysia may see a shift towards lower-value yet higher-frequency DC projects, potentially impacting revenue projections for major contractors.
The bank added that as clarity emerges, it anticipates a recovery in construction stocks, supported by strong job flows, mega infrastructure projects, and sustained private sector investments in DCs and other government-related infrastructure projects.
-- BERNAMA