Japan, Indonesia, and Singapore are experiencing a transformative surge in artificial intelligence (AI) adoption, necessitating robust infrastructure to support this growth.
Nationally, projections indicate that AI investments in APAC are expected to reach USD 110 billion by 2028, growing at a compound annual growth rate (CAGR) of 24.0% from 2023 to 2028.
As AI technologies become integral to various sectors, the demand for scalable infrastructure has intensified. Organizations are increasingly investing in compute and storage hardware to facilitate AI deployments, with spending reaching USD 31.8 billion in the first half of 2024—a 37% year-over-year (YoY) increase. This trend highlights the necessity for robust infrastructure capable of supporting complex AI workloads.
Developing AI-ready infrastructure in APAC presents unique challenges. Macroeconomic factors such as rising interest rates, supply chain constraints, and escalating construction material costs have made it increasingly difficult to bridge the funding gap necessary for building new data center capacity. Securing essential resources like land, power, and water supplies further complicates these efforts.
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Japanese Data Centers Lay the Foundation for AI Growth
As AI adoption accelerates worldwide, the need for powerful infrastructure to support AI-driven applications is becoming more pressing. Recognizing this demand, SoftBank has announced plans to repurpose a former Sharp LCD panel plant in Osaka, Japan, into a large-scale data center dedicated to AI operations. Developed in collaboration with OpenAI, the facility is expected to begin operations in 2026, with a robust power capacity of 150 megawatts, making it one of the largest AI-focused data centers in Japan.
SoftBank’s decision to convert the defunct LCD panel plant into a data center aligns with its broader vision of positioning Japan as a hub for AI innovation. With an estimated initial investment of JPY 100 billion (USD 677.05 million) and a potential total investment nearing JPY 1 trillion yen (USD 6.77 billion), the project highlights the telecom giant’s commitment to scaling AI infrastructure.
AI development requires immense computational power, with models like OpenAI’s GPT series relying on extensive data processing, high-performance graphics processing units (GPUs), and robust networking infrastructure. The Osaka data center is designed to meet these demands by offering a 150-megawatt power capacity to support high-density computing environments optimized for AI model training and inference. It will also enable businesses to leverage AI models tailored to their industry-specific needs, fostering AI adoption in Japan’s corporate sector. Additionally, given the growing concerns about AI’s energy consumption, the facility may incorporate advanced cooling and power efficiency solutions to ensure sustainable operations.
Furthermore, Elon Musk’s xAI and Nvidia have joined the AI Infrastructure Partnership (AIP), a multibillion-dollar investment fund backed by BlackRock, Microsoft, and Abu Dhabi’s MGX, with an initial fundraising target of USD 30 billion and plans to secure up to USD 100 billion, including debt financing. This collaboration is driven by the growing need to scale AI infrastructure, as the development and deployment of generative AI (GenAI) models requires immense computational power and energy resources.
According to Nvidia CEO, Jensen Huang, the demand for AI infrastructure is surging, with data centers and energy projects struggling to keep pace.
“The global buildout of AI infrastructure will benefit every company and country that wants to achieve economic growth and unlock solutions to the world’s greatest challenges.”
AI models consume far more power than previous technological innovations, prompting concerns over energy sustainability. According to the International Energy Agency, data centers’ global electricity consumption could surpass 1,000 terawatt-hours by 2026 (more than twice the amount used in 2022).
The race to scale AI infrastructure has intensified, with Microsoft alone pledging USD 80 billion in capital expenditures (CapEx) this fiscal year to expand its data center footprint. This move follows the launch of SoftBank and OpenAI’s Stargate Project, which aims to spend up to USD 500 billion on AI infrastructure development over the next four years.
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Crafting a Thriving Support Structure in Indonesia
Indonesia’s commitment to AI development took a significant step forward with the launch of its National Strategy for Artificial Intelligence (Strategi Nasional Kecerdasan Artifisial) in 2020. This long-term initiative, spanning 2020 to 2045, is designed to position Indonesia as a regional leader in AI innovation and application. President Joko Widodo’s strong stance on AI’s transformative potential—emphasizing that whichever country “controls AI can potentially control the world”—has driven the government’s proactive approach to fostering AI growth.
A core element of Indonesia’s AI strategy is its emphasis on infrastructure development to support AI innovation and adoption across multiple sectors. Recognizing that AI thrives on robust digital infrastructure, the government has accelerated efforts to expand high-speed internet access, cloud computing capabilities, and data center availability. The Making Indonesia 4.0 initiative, which serves as a broader framework for the country’s digital transformation, integrates AI infrastructure expansion with industrial automation, biotechnology, and smart manufacturing. Furthermore, Indonesia’s push to roll out 5G networks, particularly in major urban centers, is playing a crucial role in facilitating AI-driven solutions such as smart cities, autonomous systems, and advanced analytics in governance and business.
The Bukit Algoritma (Algorithm Hill) project in Sukabumi, West Java, further exemplifies Indonesia’s commitment to AI-driven infrastructure. This 888-hectare technology hub, inspired by Silicon Valley, aims to be a center for research and innovation in AI, quantum computing, neuroscience, and digital technology.
Indonesia’s AI strategy has also facilitated partnerships between the public and private sectors, accelerating the integration of AI into real-world applications. The Jakarta Smart City initiative, which deploys AI-powered solutions for urban governance, mobility, and security, showcases Indonesia’s ability to leverage AI for improved public services.
Singapore’s Multi-Faceted Approach to AI Infrastructure
Singapore’s National AI Strategy 2.0 (NAIS 2.0), launched on December 4, 2023, has placed infrastructure development at the heart of its vision for AI-driven growth. Recognizing the critical role of high-performance computing (HPC), data centers, and cloud ecosystems, NAIS 2.0 lays the foundation for a sustainable and scalable AI infrastructure. A prime example of this initiative is the Singapore Cloud Region, which features cutting-edge, liquid-cooled, high-density data centers equipped with NVIDIA HGX H100 and L40S clusters.
This advanced setup ensures that businesses and researchers have access to powerful, energy-efficient AI computing resources. Additionally, NAIS 2.0 aligns with Singapore’s goal of becoming a regional AI hub, emphasizing cross-border connectivity and AI-driven collaboration across Southeast Asia. With ST Telemedia Global Data Centres and Sustainable Metal Cloud (SMC) at the forefront of this infrastructure push, Singapore is not only expanding AI accessibility but also ensuring its AI ecosystem is cost-effective, energy-efficient, and globally competitive.
An ASEAN-Wide Commitment
Beyond Japanese, Indonesian, and Singaporean initiatives, the ASEAN Guideline on AI Governance and Ethics and the establishment of the ASEAN Working Group on AI (WG-AI), mark a significant step toward fostering cross-border collaboration and infrastructure development to support AI growth.
The ASEAN Guide on AI Governance and Ethics, launched during the fourth ASEAN Digital Ministers’ Meeting on February 2, 2024, offers a structured framework to help organizations navigate AI integration while balancing innovation and regulation. The guide emphasizes the necessity of financial and capacity support for businesses, reinforcing ASEAN’s commitment to establishing a robust AI ecosystem.
Complementing this initiative, the newly formed WG-AI aims to facilitate regional cooperation, ensuring interoperability among national AI frameworks and enabling a unified approach to AI governance.
As AI adoption accelerates in Japan, Indonesia, and Singapore, scaling infrastructure is essential to sustain this momentum. Nations that foster collaboration between governments, tech firms, and research institutions will be well-equipped to build resilient, future-ready ecosystems that drive innovation and economic growth in the AI era.
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