Given the breakthroughs in clean energy and green infrastructure, CIMB Securities firmly believes that the pipeline of data center jobs remains intact in Malaysia, which is on track to become ASEAN’s largest sustainable data center hub.
The research house said in a recent note that that as at end-Sep 2025, Malaysia’s utility firm Tenaga Nasional Bhd (TNB) supplied electricity to 29 data center projects with total maximum demand (TMD) of 3.8 GW, up from 24 DCs at end-Jun 2025 with TMD of 3.5 GW.
As of the third quarter of 2025, TNB has secured 49 electricity supply agreements with a cumulative TMD of 7.1 GW, up from 47 projects with TMD of 6.7 GW at end-2Q25 (end-1Q25 TMD: 6.4 GW).
According to CIMB, rising graphics processing unit (GPU) density has shifted the bottleneck towards cooling systems; next‑generation chips such as Nvidia’s Rubin Ultra and Feynman are projected to consume 600–1,000 kW per rack by 2H27–2028 (4 to 7 times the current average of 150 kW per rack).
As air‑cooling systems approach thermal limits, it noted liquid cooling becomes inevitable, although escalating withdrawals from potable sources for heat rejection processes intensify water security concerns.
It is noted that Malaysia has recalibrated approvals — notably, Johor’s ban on Tier 1–2 data centers and national curbs on non‑artificial intelligence (AI) projects — to redirect resources towards environmentally friendly projects that deliver the highest positive externalities to the local digital ecosystem.
“Sustainability integration is key to optimizing data center operating expenditure and easing regulatory hurdles to position local data center operators competitively in the global AI arms race,” it said.
It is also noted that data center operators in Malaysia are making commendable strides in water efficiency.
“Intensifying competition among multinational technology giants has triggered water and power supply gridlocks that have inevitably slowed the expansion of data center projects globally,
“However, cognizant of concerns over limited water supply, we note with optimism that data center operators in Malaysia are gradually moving towards advanced water resilience solutions, making commendable strides in water efficiency initiatives,” said CIMB.
It posits that a key pathway for Malaysia to safeguard its water resources is to repurpose the abundance of wastewater from urban communities for use in data center facilities.
ZData, Bridge Data Centers (BDC), and AirTrunk have partnered Johor Special Water (JSW) and Indah Water Konsortium (IWK) to repurpose treated effluents into reclaimed cooling water.
DayOne Data Centers has also deployed a Sarawakian-owned river water treatment system to purify polluted water from Sungai Tebrau for its data center facility.
Elsewhere, Microsoft has made breakthroughs in closed-loop chip-level cooling, to be implemented in Johor Bahru.
Google’s Hamina data center facility in Finland also uses seawater cooling and recovers its waste heat for district heating.
CIMB posits that Nvidia’s announcement that its latest chips can operate under warm water cooling (roughly 45°C) reinforces the narrative that AI platforms are increasingly being designed to tolerate higher inlet temperatures with minimal operational degradation, effectively rewriting the thermal rulebook.
This sets the stage for cooling systems to be optimized for precision at the silicon level to reduce associated power consumption.
While heating demand may be subdued in tropical regions, it also noted China’s Rizhao desalination plant showcases how waste heat facilitates potable water production, offering a viable data center transition pathway to being water-positive.
Data center boom drives Malaysia’s energy transition and RE demand – Hong Leong