Maybank Investment Bank said Malaysia’s data center momentum may stall if the country and Thailand face chip curbs from the United States.
The research house said in a note on Tuesday that within ASEAN, Malaysia, followed by Thailand, are the key drivers of data center investments.
Both markets offer ample land, power and water supply, physical infrastructure as well as favorable government regulation/support.
Singapore, on the other hand, faces power and land constraints and as such the pace of data center builds have slowed.
Indonesia and Philippines data center investments are specifically targeted to meet domestic demand rather than to cater to the broader ASEAN/Asia Pacific demand. The Philippines also faces high power costs.
“As we estimate more than 70 percent of the new data center investments in ASEAN (including early stage) will be in Malaysia and Thailand, the restriction of access to artificial intelligence (AI) chips could weigh heavily on these two countries as well broader data center development in ASEAN,” Maybank noted.
According to the research house, ASEAN is the third largest population block in the world, it’s one of the key markets for digital adoption and it’s favorably placed to meet the broader Asia Pacific demand for data centers as other developed markets face supply constraints.
“Curbing advanced US chips supply to key markets could leave a major region out from development of US standards,
“It’s too early to conclude whether Malaysia and Thailand will end up with major restrictions,” said Maybank.
Nevertheless, in the event strict controls are imposed, it opined that the committed data center builds could be pushed back while early stage announcements could be reviewed.
Companies in the supply chain may experience near-term pressure due to demand uncertainty, it added.
According to Bloomberg, the Trump administration is drafting a rule to restrict export of advanced AI chips to Malaysia and Thailand, aiming to enhance oversight of where US chips end up specifically China.
This move would formally replace the Biden-era AI diffusion rule, while maintaining existing chip restrictions on China and 40+ other jurisdictions.
Although the rule is not yet final, it marks the first step in Trump’s broader overhaul of AI-related export controls.
Chinese companies rent servers in Southeast Asian data centers to indirectly access Nvidia’s advanced AI chips, a likely reason for the proposed curbs by Trump, as per Bloomberg article.
“The proposal introduces uncertainty for Malaysia and Thailand’s growing roles as an emerging ASEAN/global data center hub,” said Maybank.
According to the research house, Chinese technology giants are key drivers behind the rapid growth of data centers in ASEAN.
Bytedance, owner of TikTok, has committed substantial investments in ASEAN data center infrastructure ($8.8 billion in Thailand and $2.1 billion in Malaysia), aiming to support its massive user base locally and to help comply with data regulations.
Leading firms such as Alibaba Cloud, Tencent Cloud and Huawei have also expanded operations across the region to meet rising digital demand.
Additionally, DayOne, a major Chinese data center developer, is actively expanding its footprint in ASEAN markets and it has signed a 21-year Corporate Renewable Energy Supply Scheme (CRESS) agreement with Tenaga Nasional Berhad (TNB) securing up to 500 MW of renewable (solar) energy to power its Malaysian data centers.
“Whether these companies are indirectly using ASEAN to access and run AI models is debatable, we do note that a major portion of ASEAN’s data center boom is led by Chinese companies,” said Maybank.