How much more expensive can chips be than powered shells for data centres?

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Chips Can Be Up To Four Times More Expensive Than Powered Shells for Data Centres

Chips can represent a cost that is one to four times higher than the powered shell for data centres. This significant cost variation is contingent upon the specific types of chips employed within the data centre's infrastructure.
Cost Variation Based on Chip Type

The overall expense of establishing and operating a data centre is substantially influenced by the selection of processing units. While the powered shell encompasses the physical facility, essential power and cooling systems, as well as networking and storage hardware, the central processing components, or chips, can dramatically escalate the capital expenditure. For instance, high-performance computing chips, often required for intensive data analysis or artificial intelligence workloads, typically command a higher price point compared to more standard processors. This disparity means that a data centre project might see its total funding requirements multiply when accounting for the advanced chipsets necessary for its intended operations.
Broader Funding Implications for Data Centres

The substantial cost associated with chips, in addition to the powered shells and other equipment, has significant implications for the total funding required for data centre development. S&P Global Ratings estimates that Malaysia's data centre sector will need over US$20 billion for powered shells and equipment over the next three years, based on an anticipated capacity addition of approximately two gigawatts. When the cost of chips is factored in, the total funding need escalates considerably, potentially exceeding the aggregate concentration limits of domestic banks, which are assumed to be around US$30 billion. This suggests that data centre projects will need to explore alternative capital sources beyond traditional bank loans and equity to meet their financial obligations.
Malaysia's Competitive Landscape and Future Outlook

Despite rising costs, including those related to power and the significant chip investments, Malaysia is expected to maintain its competitive edge as a data centre hub. Factors such as its strategic location, proximity to Singapore, and robust connectivity continue to be major advantages. Furthermore, similar resource scarcity and reliability challenges in neighbouring markets suggest that large-scale expansions elsewhere may also encounter increasing infrastructure and associated costs. S&P Global Ratings projects that Malaysia's data centre capacity could nearly triple by 2030, reinforcing its position as a key player in Southeast Asia's digital infrastructure growth.

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How much more expensive can chips be than powered shells for data centres?

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