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"Hyperscale" data centre would be in Southern Vietnam,

source

says

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Google opening office in Vietnam, plans AI training,

funding

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Vietnam is far behind regional rivals in data centre

industry

(Adds Alibaba declined to comment in paragraph 10)

By Phuong Nguyen and Francesco Guarascio

HANOI, Aug 29 (Reuters) - Alphabet's Google is

considering building a large data centre in Vietnam, a person

briefed on the plans said, in what would be the first such

investment by a big U.S. technology company in the Southeast

Asian nation.

Google is weighing setting up a "hyperscale" data centre

close to Ho Chi Minh City, Vietnam's southern economic hub, the

source said, declining to be named because the information was

not public.

The investment, the size of which the source did not

specify, would be a shot in the arm for Vietnam, which has so

far failed to attract major overseas capital in data centres due

to its patchy infrastructure, with large tech companies

preferring to house their centres in rival nations in the

region.

It was not clear how quickly Google would reach a decision

on an investment, but the source said internal talks were taking

place and the data centre could be ready in 2027.

A spokesperson for Google declined to comment about the data

centre plan.

Hyperscale centres are the largest in the industry, with

power consumption usually similar to that of a big city.

A hyperscale data centre with power consumption capacity of

50 megawatts (MW) could cost between $300 million and $650

million, according to estimates based on data published by real

estate consultant Jones Lang LaSalle in a report this year on

data centres in Vietnam.

Google's move was motivated by the large number of its

domestic and foreign cloud services clients in Vietnam and the

country's expanding digital economy, the source said, noting the

Southeast Asian nation was one of the fastest-growing markets

for YouTube, Google's popular online video sharing platform.

Currently the top data centre operators in Vietnam, based on

computing space, are industrial investment firm IDC Becamex and

telecommunications company VNPT, both Vietnamese state-owned

enterprises, according to an internal market report by an

industrial park in Vietnam seen by Reuters.

The Nikkei reported in May that Chinese e-commerce company

Alibaba ( BABA ) was considering building a data centre in

Vietnam. Alibaba ( BABA ) declined to comment on the matter on Thursday

when contacted by Reuters.

GROWTH STRATEGY

Despite growing demand for digital services from Vietnam's

100 million population, foreign investors in the sector have

largely shunned the country because of occasional power

shortages, less attractive investment incentives and weak

internet infrastructure which relies on a handful of ageing

subsea cables, according to industry experts.

In Southeast Asia, Singapore, Malaysia and Thailand are well

ahead in the industry, and have attracted far bigger investments

from global tech giants.

Google said in May it would invest $2 billion in Malaysia to

develop its first data centre and Google Cloud region in the

country.

Unattractive regulations on foreign ownership and data

localisation have also long been a hurdle, but in a reform

approved in November Vietnamese legislators decided to allow

overseas data centre operators to retain full ownership.

Vietnam has strict cybersecurity rules and has long clashed

with foreign tech companies about storing data in the country -

a requirement that it has, however, not regularly enforced.

Undeterred, Google is opening a representative office in

Vietnam, and is already hiring dozens of engineers, marketing

experts and other professionals, according to ads on LinkedIn.

"We now have a team on the ground to better serve our

Vietnam-based advertising customers and support the country's

digital transformation," a spokesperson for Google told Reuters.

Google is also offering 40,000 scholarships in Vietnam for

basic AI courses and $350,000 each for 20 selected AI start-ups,

Google Vietnam Managing Director Marc Woo said on LinkedIn last

month.

The company already has a large network of suppliers in

Vietnam that assemble its products, including Pixel smartphones.