Supply chain shortages are hastening enterprises' investment in virtualization and digital infrastructure, according to a report by Equinix.

Equinix recently surveyed 2,900 IT decision-makers in the Americas, APAC and EMEA for the Equinix 2022 Global Tech Trends Survey.

Supply chain challenges spark investment in digital infrastructure

Among US respondents, 63% said their business was plagued by global supply chain issues and shortages, and 64% indicated that the global microchip shortage is a threat to their business.

The ongoing supply chain challenges are underpinning a need for more reliance on virtualization and enterprises are planning for significant investment in their digital infrastructure, according to Equinix. Over one-third of IT-decision makers in the US, or 34%, plan to facilitate global expansion plans by deploying virtually via the cloud. Overall, 73% of US respondents said their organization is planning global expansion into new cities, countries or regions.

In addition, 61% of US IT-decision makers anticipate increased spending on carrier-neutral colocation services to support increased digital deployments. Of US respondents, 57% are planning to increase investment in interconnection services to further their digital transformation progress.

As enterprises navigate disruptions from inflation, supply chain issues and skills gaps that emerged in the first half of this year, "IDC consistently hears from IT leaders that timely and expansive access to innovative technology, interconnectivity and intelligent SaaS resources is critical," said Rick Villars, VP for IDC, in a statement.

Digital infrastructure companies that can provide enterprises with the necessary facilities and connectivity options, plus hybrid and multi-cloud services, "will play a vital role in helping IT teams make sustainable technology investment decisions and take full advantage of SaaS and digital infrastructure," Villars added.

Where the pandemic plays a positive role in IT

The pandemic has also had a significant impact on enterprises' digital strategies as 46% of US IT leaders plan to accelerate their company's "digital evolution" as a result of COVID-19. IT departments are experiencing some positive results of the pandemic – 54% stated their IT budgets have increased as a direct outcome of the pandemic. In addition, 57% predict that the technology changes and investments implemented during the pandemic will remain for the foreseeable future.

"In recent years, bold global expansion could have been seen as too risky or too dependent on capital investment in physical infrastructure. Now, things have changed," said Karl Strohmeyer, chief customer officer at Equinix, in a statement. "Using new digital models, companies can deploy in new markets at relatively low cost and without sacrificing resiliency."

Shift to the cloud and XaaS models

Cloud services are also becoming more important to enterprises with 77% of IT leaders in the US planning to move more business functions to the cloud. Of those respondents, 55% plan to move additional business-critical applications to the cloud, and 61% pan to move security functions to the cloud.

About 74% of US respondents are shifting to an Everything-as-a-Service (XaaS) model. Among their reasons for moving to a XaaS model are simplification of IT infrastructure (62%), flexibility (53%), cost reductions (49%) and improved user experience (42%).

IT leaders also have sustainability in mind as they update their IT infrastructure; 69% of US respondents said they are measuring and actively trying to limit the environmental impact of their IT equipment. In addition, 67% plan to only select IT partners that meet key carbon reduction targets.

This story originally appeared on DCK's sister site, Light Reading.

(Bloomberg) -- US digital infrastructure firms DigitalBridge Group Inc. and Equinix Inc. have been shortlisted into a final round of talks for the data center business of Malaysia’s Time Dotcom Bhd., according to people familiar with the matter.

DigitalBridge and Equinix outbid other companies in the industry and investment funds, the people said, asking not to be identified because the matter is private. The two companies are seeking to sign a deal for the assets, known as Aims Data Centre, within the next few weeks, the people said.

Time Dotcom may retain a stake in the business, which could be valued at $600 million or more in a sale, the people said.

No final decisions have been made and a deal could face delays or even fall apart, the people said. Representatives for Time Dotcom, Equinix and DigitalBridge declined to comment.

Beyond DigitalBridge and Equinix, I Squared Capital-owned BDx, Stonepeak-backed Digital Edge and Temasek Holdings Pte’s ST Telemedia Global Data Centres had been among bidders for the assets, people familiar with the matter have said.

Backed by Malaysia’s sovereign wealth fund Khazanah Nasional Bhd., Time Dotcom offers fixed-line voice and broadband services to consumers and businesses, as well as enterprise solutions in areas such as cloud and security. Beyond Malaysia, it has stakes in providers in Vietnam and Thailand, according to its latest annual report. Its shares have climbed 6.3% this year, valuing the firm at around $2 billion.

Aims Data Centre, which is home to the Malaysia Internet Exchange, had about 111,640 square feet of net lettable area as of the end of last year, the annual report shows.

DigitalBridge, based in Boca Raton, Florida, invests in infrastructure such as data centers, cell towers and fiber networks, according to its website. It counts about 25 portfolio companies and had almost $48 billion in assets under management as of the end of June. Its stock has plunged 45% this year, valuing the company at about $3 billion.

Founded in Silicon Valley in 1998, Equinix provides digital infrastructure such as data centers to connect companies in sectors including finance, manufacturing and retail, according to its website. Its footprint in Asia Pacific includes Australia, China, India, Japan, South Korea, Singapore and Hong Kong. Equinix’s shares have dropped 22% this year, valuing the company at $60 billion.

(Bloomberg) -- Converge ICT Solutions Inc. is considering selling a stake in its infrastructure platform, according to people familiar with the matter, a move that would help the Philippine fiber provider raise cash to invest across the group. 

Co-founded and led by entrepreneur Dennis Anthony Uy, Converge has been holding talks with prospective advisers as it weighs a deal that would bring a minority investor into its networks platform, the people said, asking not to be identified because the matter is private. A transaction could help raise about $1 billion depending on the final size and structure, and draw interest from other firms in the industry and investment funds, the people said.

Shares in Converge climbed as much as 4.3%, their largest increase in more than two weeks, valuing the company at about $2.3 billion.

The company offers fixed broadband services for residential, enterprise and wholesale customers, counting more than 560,000 kilometers of fiber assets and a network reaching more than 13.5 million homes in the Philippines as of the end of June, according to a recent press release. It also offers integrated data-center and network solutions. Private-equity firm Warburg Pincus held a minority stake in Converge until earlier this year.

Converge’s revenue growth may slow to 25%-30% in 2022 from 69.2% last year as consumers return to schools and offices, and as inflation damps demand, Chief Operations Officer Jesus Romero said in August.

Considerations are at a preliminary stage, no final decisions have been made and Converge could still decide against pursuing a deal, the people said. 

While management regularly reviews opportunities to maximize shareholder value, no decision has been made on any such transaction, Converge’s Investor Relations Director Owen Kieffer Ocampo said in response to a Bloomberg News query. 

Digital infrastructure assets in Southeast Asia are drawing increasing investor interest. Globe Telecom Inc. in the Philippines last month agreed to sell two portfolios of towers to a KKR & Co.-backed company and a Stonepeak joint venture for about $1.3 billion. In Malaysia, DigitalBridge Group Inc. and Equinix Inc. have been shortlisted into a final round of talks for the data center business of Time Dotcom Bhd., Bloomberg News has reported. 

Even in tight economic times for most in the tech sector, some firms are restructuring and increasing their philanthropic efforts.

Global colo provider Equinix has set aside $50 million for a foundation to support digital inclusion efforts around the world. Previously, the company was spending about $1 million a year out of its operating expenses to support employee activism and donations and in direct grants to individual organizations.

Now, the company will spend $2.5 million a year, or 5% of the foundation's total assets, said Bruce Owen, the company's vice president for employee and community impact.

"The foundation is a way for us to scale on the philanthropic side," he told Data Center Knowledge.

Equinix is also working on environmental sustainability efforts but those will continue to be funded out of operating expenses.

Foundation Partners with Customers and Employees

So far, Equinix has focused its philanthropy on employee matching, disaster relief, and direct grants.

Now, that program will be expanded, said Owen. In addition, Equinix will also look for more opportunities to fund projects in cooperation with its customers.

"We are going to partner with employees and customers to find ways where we can help make the biggest impact," he said.

Equinix is also working with dozens of nonprofit organizations to help bridge the digital divide, and that work will continue, just under the auspices of the foundation.

The non-profits include BigHope, a Texas nonprofit that prepares children for STEAM careers, CLAP-Tech, a group in Hong Kong that helps high school students, and World Pulse, an online social network of women from 227 countries.

"We’ve been supporting these organizations since 2015 and we want to be able to scale that up," said Owen.

Equinix also has employee-focused philanthropy projects.

Employee donations are matched dollar for dollar, and, for particular campaigns, Equinix doubles the donation. Equinix has also matched employee volunteer hours -- for every hour an employee donates to a non-profit on their personal time, Equinix donates $20 towards a charity of the employee's choice.

Employee engagement efforts will continue to be run by Equinix Inc, Owen said, not the foundation.

"We're about to embark on our impact month, with employees running events around the world, and we will continue to do that," he said. "We do it because it aligns with our company's purpose."

It also aids in attracting and retaining employees.

"I do think it helps," he said. "Especially when employees realize they can commit their energy and efforts to something that has a greater purpose."

Foundation to Focus on Digital Inclusion - Not Climate

The foundation will be focusing on issues related to digital inclusion, not the environment, but that doesn't mean that Equinix isn't committed to environmental causes as well.

In fact, the company joined the iMasons Founding Partner Program earlier this year.

"We signed on as one of the early signatories," said Owen. 

More than 160 data centers and related companies have now signed on to the iMasons Climate Accord, signaling a sea change in the industry.

And earlier this month, Equinix announced a research project to look at the feasibility of hydrogen power technologies.

The company also plans to be carbon neutral by 2030, said Owen.

The environmental efforts are critical to the company, he said, and core to how it runs the business. "That will continue to grow and scale, and will not be funded out of the foundation."

For decades, the cities of Frankfurt, London, Amsterdam, and Paris (FLAP) have dominated the European data center sector. But Spain is quickly catching up — and cloud service providers and colos around the world are taking notice. They’re setting their sights on this side of the Iberian Peninsula as the Spanish data center industry continues to grow and thrive.

According to a Research and Markets report, “Spain is one of the leading secondary data center markets in Europe,” with Barcelona and the nation’s capital of Madrid serving as chief data center construction sites, and Madrid emerging as a high-investment location.

Top Data Center Builds in Spain

Spain is fast becoming a leading contender for data center site selection. Here are the most recent data center builds or announcement of builds in Spain:

Why Spain is a hot spot for data center site selection

So what’s behind the spate of data center openings in Spain? For one, the country’s geographic location makes it an ideal connective bridge for the EMEA region, offering an advantage for data center operators thinking of expanding in those areas.

“From a strategic perspective, major service providers are looking to assure service continuity by geographically diversifying their operations,” said Chris Noble, cofounder and CEO of Cirrus Nexus, a platform helping companies manage the carbon impact of their cloud footprint.

Spain is also enhancing its subsea cable connectivity — from the EllaLink submarine cable connecting South America and Europe to Google’s Grace Hopper cable linking the U.S., the U.K., and Spain and Meta’s 2Africa subsea cable project. These connections are enabling lower latency, higher bandwidth, and enhanced network performance for data centers.

Similarly, Spain’s data center industry is supported by the Spanish government’s digitalization initiatives. Digital Spain 2026, for example, sets out a roadmap to provide broadband coverage for 100% of the country’s population and promote 5G technology across the nation.

Moreover, Spain’s commitment to renewable energy could be a big draw for cloud service providers and colos that consider sustainability a top priority. “While other European countries are facing energy shortages due to the outbreak of war in Ukraine, there is still significant power capacity available in Spain, which also happens to be a large producer of renewable energy — a key sustainability metric for new data center builds, especially hyperscalers,” said Joe Capes, CEO of LiquidStack, a company providing liquid cooling solutions for data centers. The country is aiming for renewables to comprise 74% of the energy mix by 2030 and is looking to be carbon-neutral by 2050, “potentially making Spain one of the cleanest and least carbon-intensive data center regions in Europe,” Noble said.

(Bloomberg) -- Equinix Inc. plans to invest $160 million to build its first data center in South Africa, as part of the firm’s African expansion push. 

The US data center company will build its first facility in Africa’s richest city, Johannesburg, and expects to be operational by mid 2024, said Equinix EMEA president Eugene Bergen in an interview. The deal follows its acquisition of Nigeria’s MainOne, that valued the west African data center business at $320 million. 

“South Africa was a big target for Equinix as it is the most developed economy in sub-Saharan Africa,” said Bergen. “We are focusing to get into Africa, and we are looking at another five or six countries to enter.”

California-based Equinix is looking to take advantage of a predominantly young African population with increasing access to the internet that is providing a boon for the industry, albeit from a low base. 

With the South African deal, the global data center investor plans to serve large enterprises such as banks, content and media companies, and hyper-scalers operating in the country and on the continent, said Bergen. The company is seeking anchor customers that it could potentially follow to other African countries, said Bergen. “We expect the customer ramp-up in South Africa to go quite quickly,” he said.

Tech giants such as Amazon.com Inc. and Microsoft Corp. have also invested in data centers in African countries in recent years as demand for storage grows. The continent accounts for just 1% of global data center capacity, creating a large opportunity for investors that want to tap into the region’s growth potential, while taking on certain operating risks such as an unreliable power supply. 

While South Africa is home to the largest electricity supplier on the continent through its utility Eskom, there have been significant power interruptions as it struggles to replace its aging plants and meet growing power demand. Equinix’s Bergen said energy reliability was a strong focus for the business across its operations, and it takes various steps to ensure a stable supply including building its own power capacity, installing multiple back-up generators and making deals with local grids. 

Nasdaq-listed Equinix owns 249 data centers and operates in 32 countries. The South African deal comes soon after the company announced plans to expand into Indonesia and Malaysia. 

More stories like this are available on bloomberg.com

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When colocation giant Equinix recently announced plans to bump up its data center temperatures to 80 degrees Fahrenheit, it raised two questions: is it safe for hardware, and will other data center operators follow suit? Some industry analysts say it is not only safe, it will become a trend. But it depends on whom you ask.

Equinix certainly feels it’s safe and is touting the benefits. By increasing the temperature at each of its 240-plus data centers, the company said it will reduce energy consumption by 10% in some locations, decrease its carbon impact and help its customers reach their supply chain sustainability goals.

The temperature change won’t happen overnight. In its announcement in early December, Equinix said it’s a multi-year plan that will require some capital upgrades and improvements in its data centers. The company is currently evaluating its data center portfolio to define a change-management roadmap, and its new environment standard will gradually be adopted across its global data center portfolio, the company said.

Equinix said the effort will also reduce its energy costs. According to the company, its cooling systems currently account for about 25% of its total energy usage globally.

“We are anticipating a long-term benefit in reduction of infrastructure energy costs from efficiency improvements,” Equinix told Data Center Knowledge. “Our actions to improve energy efficiency in the data center should help further insulate our customers against a volatile energy market and advance their sustainability goals.”

Is Hotter Temperatures Safe for Data Center Equipment?

Equinix said the higher temperature will not affect the longevity and performance of servers and storage equipment. ASHRAE, the American Society of Heating, Refrigerating and Air-Conditioning Engineers, recommends that servers and storage hardware operate in the 64.4 to 80.6 degrees Fahrenheit (18 to 27 degrees Celsius) range in data processing environments, so 80 degrees Fahrenheit is within the recommended range.

Equinix’s typical operating temperature in their data centers is 73 degrees Fahrenheit (23 degrees Celsius), but several facilities operate closer to 77 degrees Fahrenheit (25 degrees Celsius) without issue, the company said.

“We are aligning with ASHRAE because its standard range has been extensively tested and proven safe. The ASHRAE A1 Allowable (A1A) is an internationally recognized standard operating envelope for mission-critical IT equipment. It has been widely adopted by IT equipment manufacturers since 2011,” Equinix told Data Center Knowledge.

“Since then, empirical studies have validated the temperature and humidity range as a suitable environment for operating IT hardware without additional risk of equipment failure or reduction in computing performance,” Equinix added. “In addition, equipment manufacturers and our customers’ hardware have had refresh cycles to ensure that their hardware is ready to operate within A1A.”

ASHRAE first published its “Thermal Guidelines for Data Processing Environments,” in 2004 and has updated its guidelines four times with the last update in 2021, said Matt Koukl, vice chair of ASHRAE Technical Committee 9.9.

“The thermal envelope has increased over the years based upon extensive research funded by ASHRAE,” Koukl told Data Center Knowledge.  

What the Experts Say

Several industry analysts agree with Equinix and say today’s current hardware can perfectly handle the 80 degree temperature. But one industry insider says it’s an open question mark.

Hardware vendors detail their products’ Mean Time Between Failure (MTBF) rates based on different operating temperatures. But in general, today’s latest state-of-the-art technology is built to handle the 80 degrees that Equinix will operate in, said Rob Brothers, IDC’s program vice president of data center and support services.  

Advances in hardware allows organizations to operate their equipment at higher temperatures, he said.  For example, solid state drives (SSDs) don’t have moving parts, so they can operate hotter than hard disk drives (HDDs), he said. In contrast, HDDs have spinning disks and generate more heat, so they need to be cooled and operated at a lower temperature.

Whether a data center operator can increase its temperature to 80 degrees without affecting hardware depends on the composition of the data center and the hardware inside it, Brothers told Data Center Knowledge.  

Moises Levy, Ph.D., a senior principal analyst at Omdia who leads data center power and cooling research, agrees. He praises Equinix’s strategy, saying it’s another step toward data center operational excellence, increased efficiency and reduced environmental impact. But he cautions that older data center equipment may have different operating requirements than newer equipment, he said.

“Changes to existing environmental conditions – temperature, humidity, airflow – need to consider the IT equipment requirements, '' Dr. Levy told Data Center Knowledge. “Legacy IT equipment may have different operating environmental conditions established by the manufacturer when compared to newer technologies. Compliance with the manufacturer's temperature guidelines is important to guarantee the desired equipment's performance and lifespan.”

However, one industry insider said increasing the temperature in data centers could potentially impact the longevity of server and storage hardware. It’s uncertain, but years from now, it’s possible that colocation customers will find that the higher temperature may have reduced the life span of its servers from seven years to six years, he said.

“It potentially could have an impact because all the components inside servers will operate at a higher temperature by default,” the industry insider said.

Time will tell. If Equinix is successful and proves that the higher temperature doesn’t affect the equipment, then other colocation providers and data center operators may follow suit, he said.

“If they report nothing happened, then more people will start doing it, which is good for the industry,” the insider said.

Will Others Follow Equinix’s Lead?

In fact, some analysts believe raising data center temperatures will become a trend. Equinix is the world’s largest multi-tenant data center (MTDC) operator, and for the company to announce plans to raise the temperature across all its data centers to improve sustainability is significant – and it soon may spur other colocation providers to adopt a similar strategy, said Sean Graham, IDC’s research director of cloud to edge data center trends.

“It has broader implications in the market. People may say, ‘it’s Equinix. This is the top dog in the MTDC space,’ maybe we can take this step now,” Graham said. “As organizations are being crunched with energy prices and an impending recession on the horizon, this is potentially a way for them to become more sustainable themselves and to look for savings as we head towards a recession and rising costs across the board.”

Equinix isn’t the only major data center operator to raise its data center temperatures. Meta has reportedly raised temperatures of some of its data centers to 90 degrees Fahrenheit, five degrees higher than its norm, as part of a pilot to reduce power and water consumption. Microsoft previously announced that it would run its data centers at higher temperatures, but it didn’t give specific numbers.

While Equinix is staying within ASHRAE’s recommended temperature guidelines, Meta, in its pilot, is blowing past it by nearly 10 degrees.

Meta can do that because it operates in a different environment. Meta is powering and managing its data centers simply for themselves, while in the colocation market, Equinix must meet service level agreements and have customer input into how it operates, Graham said.

“Meta doesn’t have the same constraints. It is essentially a closed system where it can define the parameters,” he said.

While colocation providers may have a blend of 20 different suppliers of servers, Meta uses uniform servers and can run at 90 degree temperatures because it has built-in resilience, the industry expert who requested anonymity said.

From Meta’s perspective, losing a server, a rack or even a whole site doesn’t affect service to the customer. “They’re much more tolerable to failures because the customer experience is not affected,” he said.

IDC’s Graham and Brothers believe raising data center temperatures will become a trend in the data center. In fact, some enterprises have quietly increased their data center temperatures, Graham said.

“I’ve seen it in enterprise data centers. But they don’t have the need to go public to promote their brand with it. A lot of it is driven by energy costs and sustainability initiatives,” he said.

But there will be many who refuse to budge. Most organizations keep their data centers in the 68 to 71.6 degrees Fahrenheit (20 to 22 degrees Celsius) range, Graham said.

“It’s fear based, and because they’ve always done it that way,” he said. “I always go back to what I heard from a Fortune 500 CIO. When I tried to pitch something like this, he said, ‘If I save energy, I get a pat on the back. If the data center goes down, I get fired.’”

In the meantime, Graham says the announcement was a smart move for Equinix because they can differentiate themselves in the market and will be seen as one of the more sustainable data center operators.

Dr. Levy agrees, saying Equinix could be a pioneer in raising data center temperatures.

“It can be a case study, and depending on the results, it could become a best practice,” Dr. Levy concluded.

Data center operators, both colos and hyperscalers, are seeing renewed interest in putting the excess heat generated from cooling data centers to provide nearby homes with an affordable resource: heat.

For an industry obsessed with cooling, it seems odd that heat would be the symbol of goodwill between data centers and the communities in which they operate. Right now, primarily Nordic countries leverage this data center heating opportunity to their advantage. With challenges in energy prices, due to global inflation, and lack of heating availability, partially due to the Russia-Ukraine War, data centers such as Equinix, QTS, and Digital Realty have stepped up to provide heating in some of the chilliest cities on the planet.

Data Centers Providing Energy Resources for the Grid

Data centers have been doing this on a small scale for more than a decade -- but sustainability efforts, as well as rising energy costs in Europe due to the Russia-Ukraine conflict, are lending new urgency to green energy supplies.

In Finland, Equinix has been heating homes in Helsinki for more than 10 years, said Sami Holopainen, Finland managing director at Equinix. And the firm has plans to raise temperatures in their data centers to reduce energy costs.

Elisa, a Finnish data center operator that’s been carbon-neutral since 2020, works with Helsinki Energy to heat 1,000 one-bedroom flats, said Krister Palmen, head of network operations management, while Hyperco is working on two projects in Helsinki projected to heat 5,000-7,500 apartments per 10 MW of data center, said Ari Kurvi, chief development officer at Elisa.

In the Netherlands, QTS Data Centers recently announced that its Groningen data center is already heating 5,000 homes, said J. D. Luycks, managing director for Europe.

Why Are Data Centers Providing Heat in Nordic Countries Only?

Nordic countries are in the lead because many major cities heat homes through a district heating system, a municipal utility like electricity or water. District heating covers 90% of Finnish cities, Kurvi said. It covers heating for 65% of Danish households, according to Henrik Hanse, CEO of the Danish Data Center Industry. Nearby data centers tap into the system using heat exchangers, using heat pumps to intensify the heat, and pipes to transport heat (typically as hot water) to the district heating system and then to homes.

Of note: If the district heating system can’t accept the data centers’ heat, those facilities must still use their cooling systems to expel the excess heat.

To connect to the district heating system, data centers have to invest in modifications to facilities. The district heating system or energy company may provide funds to retrofit a data center for heat provision.

Groningen, for example, is investing 60 million euros in the QTS heating project. But several operators said they were willing to make the investment to improve their sustainability. Operators also save on electricity, and some countries, such as Finland, have lower electric utility rates for data centers that reuse heat.

Some operators would like to provide heat for homes on the district heating grid in Nordic countries. But some can’t find a recipient. Greenergy Data Centers, near Talinn, Estonia, has yet to find a service provider because its data center, which opened less than a year ago, hasn’t reached enough IT load, said Uko Urb, marketing manager. Equinix is having trouble finding a German recipient, Holopainen said.

Expanding Beyond Nordic Borders

Increasingly, regions with district heating systems are looking to expand them, which could give data center operators additional options for using excess heat. What’s more, the European Union is implementing sustainability goals that put pressure on data centers to engage in sustainable operational models.

Digital Realty, for example, is designing most of its European data centers using chilled water to more easily lend themselves to heat reuse, said Lex Coors, chief data center technology and engineering officer at Digital Realty.

Using excess data center heat for homes in regions without district heating systems is more challenging, but it’s possible if the data center is close to residences. In Frankfurt, Telehause Deutschland will provide its excess heat to 1,330 apartments under construction across the street by 2025, said Béla Waldhauser, CEO, Telehause Deutschland.

For data center player Equinix, it's all about digital transformation. It is growing revenue as well as capacity, with digital transformation the main driver of both.

The company has embarked on a global growth binge, planning an extra 258MW in capacity – equivalent to half the current total - to come online over the next 18 months. "We’re trying to set ourselves up as the digital platform for transformation of enterprise customers," Equinix APAC president Jeremy Deutsch told Light Reading.

For data centers, digital transformation means businesses shifting their IT infrastructure into their facilities to get closer to customers and ensure better performance of digital services.

Deutsch says that while Equinix does a lot of business with hyperscalers, it believes the biggest upside is in enterprise. The company has over 10,000 customers, including more than half of all Fortune 500 companies.

"All of it comes back to the fact that companies in the digital world need to interconnect with each other and the location where that happens is at Equinix," Deutsch said.

The company is already in a sweet growth phase. It has just reported Q1 revenue of $2 billion, up 15%, with 36% higher operating income of $384 million.

Business-grade AI

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Equinix today announced that its Los Angeles and Sydney, Australia, data centers will provide connectivity to Southern Cross Cables’ new NEXT submarine cable system, which bolsters bandwidth between Australia and New Zealand to the United States, Equinix executives said.

Southern Cross recently launched the new submarine cable network that stretches across the Pacific Ocean, from Australia and New Zealand to Los Angeles. The new network, which spans 15,840 km – or 9,842 miles – increases the aggregate capacity of Southern Cross’ transpacific networks by 500% and provides the lowest latency path between the countries, Equinix said.

“This new system is faster and has way more capacity,” said Jim Poole, Equinix’s vice president of business development, in an interview with Data Center Knowledge.

Equinix’s LA4 International Business Exchange (IBX) data center in Los Angeles serves as the Southern Cross NEXT system’s cable landing station, the location where the undersea fiberoptic cable terminates. On the other end of the network, Southern Cross also uses an Equinix IBX data center as its cable landing station in Sydney, Equinix said.

In other words, Equinix’s data centers are the interconnection points, enabling its customers to access the new transpacific network, Poole said.

“All the hyperscalers have gateways with us. In addition, a couple of hundred large enterprises colocate with us. From Southern Cross’ perspective, it’s immediate monetization. The buyers of capacity on that system are co-residents in the same campus,” he told Data Center Knowledge.

Demand for cloud services, digital media, and e-commerce is fueling the demand for increased capacity between Australia and the U.S., Equinix said. In fact, content providers are the primary consumers of transpacific bandwidth, accounting for 78% of the bandwidth usage in 2022, the colocation provider said, citing statistics from TeleGeography, a telecommunications market research company.

Tim Stronge, vice president of research at TeleGeography, said Equinix’s partnership with Southern Cross on the new undersea cable network is part of the company’s strategy to become more integrated with the submarine cable business.

Historically, cable operators built a landing station on or very close to shore and customers wanting to use the undersea network would have to backhaul to a nearby data center. Cable operators increasingly are partnering with third-party data center operators to house their landing station, which benefits both parties, he said.

“A company like Equinix gets their customers better access to international networks directly coming into their building,” Stronge said. “And the cable operator gets someone to handle all the headaches of property management, electricity, and power backup. It provides their customers — anyone leasing their cable — with a really good, rich network ecosystem to interconnect with.”

Equinix's 'Cable Landing Station-Enabled' Strategy

Equinix said more than 50 Equinix metro locations are “cable landing station-enabled,” meaning Equinix IBX data centers are close enough to the coast to support a cable landing station deployment. Since 2015, Equinix has won 50 subsea cable projects and is tracking over 60 projects with go-live dates within the next two years, the company said.

Stronge said the strategy makes sense for Equinix.

“The value of their facilities is dictated by how many customers interconnect there,” he said. “So bringing in a cable to your facility really expands its international reach and makes it even more attractive than it was before.”

Potential customers for Southern Cross’ NEXT submarine cable system include hyperscalers, other cloud service providers, research and educational networks, governments, traditional telecommunications providers, and internet service providers, Stronge said. Large enterprises could also buy directly from Southern Cross, but they often get capacity through an intermediary such as a telecom carrier, he said.

Southern Cross spent about two years installing the new submarine cable network. The company launched the network in July 2022 and began offering 400 Gigabit Ethernet service in January 2023. It includes the first submarine fiber connections to Tokelau and Kiribati in the Pacific Islands.

(Bloomberg) -- DBS Group Holdings Ltd. and Citigroup Inc. said banking facilities have resumed following a disruption on Saturday (October 14) that prevented customers from fulfilling transactions across various platforms.

Services are working again after a technical issue at an Equinix, Inc. data center used by the lenders was resolved. Payment services were down for several hours on Saturday, and customers cited the inability to use their cards, access online banking facilities or make cash withdrawals. 

“A technical issue occurred at one of our data centers in Singapore that raised the temperatures in the data center and impacted some customers’ operations,” an Equinix spokesperson said. “The technical issue has been resolved and we are in contact with impacted customers.”

A “thorough” investigation will take place,  Equinix said.

The Monetary Authority of Singapore said it was informed of the matter by the banks on Saturday afternoon. 

The latest disruption follows delays experienced by DBS customers last month in processing transactions on one of its payment services. In May, officials imposed higher capital requirements on DBS, Singapore’s largest lender, following glitches with its online services that the regulator called “unacceptable.”

(Capacity Media) -- MainOne, an Equinix company, confirms the launch of its open access, carrier-neutral, Tier III data center, AB1.2, in VITIB, Grand Bassam, Cote d’Ivoire.

The news builds on MainOne’s landing of its subsea cable to the launch of its initial data center in 2019, in Cote d’Ivoire.

Through the expansion, MainOne aims to bolster digital transformation, foster innovation, and support growing demand for data processing, storage, and connectivity in Cote d’Ivoire and across Francophone West Africa.

"With this launch of our new data center in Cote d'Ivoire, we are entering an exciting phase of transformation for businesses as it delivers a great opportunity to welcome more customers into our rich digital ecosystem, interconnected to the major digital players in the region and delivering 100% uptime connectivity to internet,” said Etienne Kouadio Doh, country manager for MainOne in Cote D'Ivoire.

“We expect this state-of-the-art facility to become a catalyst for digital innovation, providing a robust infrastructure for enterprises to thrive, and further reinforcing Cote d'Ivoire as the digital hub for the Francophone West African region."

MainOne will give customers in Cote d’Ivoire access to a range of enterprise-grade digital solutions with access to global services and internet exchanges, including the Amsterdam Internet Exchange which is hosted at the data center.

In addition, new facility will deliver advanced security systems, next-gen technologies, global certifications, in-country expert support and the region’s largest interconnected ecosystem to deliver the highest levels of reliability.

Customers will also gain access to over 240 data centers in 32 countries through dedicated interconnection services at our data centre via the Equinix platform.

In May of this year, MainOne expanded its interconnection capabilities using the Equinix Fabric to extend its network reach and give enterprise customers connectivity to cloud providers, remote markets, and local infrastructure.

This article originally appeared in Capacity Media

This article originally appeared on Light Reading.

Data center operator Equinix, in collaboration with Nvidia, has rolled out a fully managed private cloud service that allows companies to quickly build and run their own massive AI models.

Under the partnership, Equinix would install and operate a company's privately owned Nvidia infrastructure at its International Business Exchange data centers. Corporate customers will buy Nvidia systems and pay Equinix to operate them on their behalf.

The service, which is now commercially available, is built on Nvidia DGX systems, Nvidia networking as well as Nvidia AI software.

According to Charles Meyer, president and CEO of Equinix, companies need adaptable, scalable hybrid infrastructure in their local markets to bring AI supercomputing in their data.

"Our new service provides customers a fast and cost-effective way to adopt advanced AI infrastructure that's operated and managed by experts globally," he said, adding that the new service enables customers to operate their AI infrastructure in close proximity to their data.

DGX systems housed within Equinix's data centers are connected to the outside world through a high-speed private network, and the company also provides high-bandwidth interconnections to cloud services and enterprise service providers.

With their Nvidia partners in tow, the Equinix managed services team undertook comprehensive training on how to build and operate the AI systems.

"Generative AI is transforming every industry," said Jensen Huang, founder and CEO of Nvidia. "Now, enterprises can own Nvidia AI supercomputing and software, paired with the operational efficiency of Equinix management, in hundreds of data centers worldwide."

Without disclosing names, Equinix said there are already enterprise customers using the new managed services – many of whom belong in industries such as biopharma, financial services, software, automotive and retail.

These customers are building AI Centers of Excellence to provide a strategic foundation for a broad range of large language model (LLM) use cases. These include accelerating time to market for new medications, developing AI copilots for customer service agents and building virtual productivity assistants.

Owning Their AI Infrastructure

In October, IDC predicted enterprise spending on generative AI (genAI) software, infrastructure hardware and IT services would reach nearly $16 billion worldwide for 2023, and will grow to $143 billion in 2027.

The technology research firm said generative AI investments will follow a natural progression over the next several years as organizations transition from early experimentation to aggressive buildout with targeted use cases to widespread adoption across business activities with an extension of genAI use to the edge.

Equinix's managed AI deal with Nvidia comes at a time when companies in Asia-Pacific are showing interest in owning their AI computing system for privacy and security reasons.

"Today, as we talk to enterprise customers around the world, one of their number one concerns and ideas around AI is being able to own their own model and really own their own future," Charlie Boyle, Nvidia vice president of DGX systems, said during a press briefing yesterday.

In Asia-Pacific, he added that many companies are rapidly expanding their use of the technology. But they don't have the in-house expertise to build out their own large language models.

He pointed out that most companies need to be very close to the AI processing that they're trying to accomplish.

"The AI model, the AI execution has to be very close to the data. And all those elements come together in customers wanting to do AI, wanting to do it fast, securely, and near their data. But many times they're lacking either the data center space or the internal expertise of how to manage all of that," Boyle said.

Will quantum computers be the next big thing in the world of data centers? Most quantum optimists – meaning those who believe quantum computers are more or less ready for real-world use– would say yes.

As quantum computers evolve from experimental systems into production-ready resources that businesses leverage on a large scale, data centers are the obvious place for them to live. But that doesn't necessarily mean most data centers will become home to quantum devices anytime soon.

The rate at which quantum computers make their way into conventional data centers – or at which data centers evolve to accommodate quantum devices – is likely to prove slow.

The State of Quantum Computers

As of 2024, quantum computers, which leverage quantum mechanics to perform operations thousands of times faster than conventional computers, have come a long way compared to just a few years ago.

Although we don't yet have quantum computers that are reliable enough, inexpensive enough, and scalable enough to handle everyday workloads, large tech companies, like Google and IBM, are already operating quantum devices that can handle real-world tasks.

Partly for that reason, many observers argue that we're approaching quantum practicality– meaning the point at which quantum computers become usable for widespread deployment.

Quantum Computers and Quantum Data Centers

Despite the advances in quantum computing technology, there has been little convergence between quantum computers and the data center industry. Most quantum devices exist in purpose-built facilities, not the everyday data centers that host traditional infrastructure.

To be sure, some quantum computer operators call those facilities, like Google's quantum lab in Santa Barbara, "quantum data centers." But they're not data centers in the conventional sense; they're buildings constructed solely to house quantum computers.

There is good reason, however, to expect traditional data centers – the type whose main job today is hosting conventional servers, not quantum computers – to become home to quantum devices as well. After all, in terms of space, energy and cooling equipment, quantum computers have the same basic needs as convention computers. It makes just as much sense to deploy quantum devices in a data center as it does x86 or ARM servers.

Plans to this end are already in development: Last year, Equinix announced a partnership with quantum computing vendor Quantum Circuits to deploy a quantum computer in an Equinix data center. Equinix said at the time that the deployment would be complete by "late 2023," and it does not appear that the companies hit that goal. Nonetheless, their initiative is a big deal because it represents one of the first efforts to bring a quantum computer into a conventional data center.

Challenges to Quantum for Data Centers

On the other hand, despite some progress in turning data centers into homes for quantum computers, we probably shouldn't expect such deployments on a large scale in the near future. There remain steep challenges to overcome for both the quantum computing industry and the data center industry.

On the quantum computing side of the equation, demand for real-world quantum devices needs to pick up before we're likely to see more businesses show interest in deploying quantum computers inside data centers. To date, despite significant leaps forward in recent years, most quantum computers are still used only for experimental or proof-of-concept purposes. Analysts predict that this will change in coming years as companies make massive investments in quantum infrastructure–  much of which will likely be housed in data centers – but that's just not happening yet.

As for the data center industry, many facilities will need to undergo some physical changes to become ideal homes for quantum computers. Currently, conventional data centers provide the core space and resources that quantum devices need to function. But quantum computers have some unique needs, such as extra protection from electromagnetic interference, that most data centers cannot currently provide.

The good news for the industry is that meeting these requirements won't require rebuilding facilities from the ground up in most cases. Data centers can be retrofitted to become quantum-friendly. But almost none have undergone such changes yet – and given the low demand for deploying quantum devices in data centers, few data center operators have strong incentive to optimize their facilities for quantum computing.

So, there's something of a chicken-and-egg problem that must be overcome before quantum data centers become a widespread reality: Until more businesses want to deploy quantum computers inside data centers, data center operators are unlikely to invest in the changes needed to accommodate quantum hardware. But until they do, businesses have less reason to turn to data centers as homes for quantum computers.

Slow but Steady Progress Toward Quantum Data Centers

We're inching closer to a world where quantum computers become commonplace in data centers. But that world is still at least a few years away.

In the near future, the closest we're likely to come to real-world quantum data centers are small-scale proofs-of-concept, like Equinix's piloting of a quantum computer deployment. Expect that to change, but not too soon.

(Bloomberg) -- Nasdaq-listed Equinix will invest $390 million in Africa over the next five years building data centers and expanding current operations in South Africa and the west of the continent.

The California-based data center operator is also pursuing opportunities in East Africa and will potentially spend more to build or acquire there, recently appointed managing director for South Africa, Sandile Dube, said in an interview. 

“We will continue to invest where it makes sense on the continent, and we are undergoing a number of studies to ascertain these opportunities,” Dube said. “The money planned for investment includes the construction of data centers at our current operations, but excludes plans for additional markets.”

Tech giants such as US-based Amazon.com, Microsoft Corporation and China’s Huawei Technologies Company have been investing in data centers in Africa in recent years as demand for connectivity and storage grows. The continent accounts for just 1% of global data center capacity, creating a large opportunity for investors that want to tap into the region’s growth potential, while taking on certain operating risks such as an unreliable power supply. 

Africa is home to a young and tech savvy population with increasing access to the internet that is providing a boon for the industry, albeit from a low base. Equinix entered the continent two years ago with the $320 million acquisition of MainOne Cable Co. and started building its first data center in Johannesburg, South Africa, in 2023. 

“We’re going to need key hubs on the continent as we have in Europe, which is why we have started with Lagos, Joburg and, in time, we would like to add Nairobi,” Dube said.

Equinix typically prefers acquisitions when entering a new market, although in certain cases such as South Africa it decided to build its own data centers, he said.

(Bloomberg) -- Short seller Hindenburg Research targeted data center owner Equinix on Wednesday (March 20), alleging that the company manipulates its accounting and is selling an “AI pipe dream.” 

Hindenburg’s disclosure of a short position and its allegations raise questions about the future for Equinix, which has been benefiting from the expectation that artificial intelligence companies will need even more data centers to power the technology. Equinix shares were pummeled Wednesday and the company pulled a previously planned bond offering after the report hit.

Equinix dropped 2% to $827.35 at 3:28 p.m. in New York. The company’s bonds also weakened Wednesday, with its 3.9% bonds maturing in 2032 trading 20 basis points wider at 123 basis points more than Treasuries around 3 p.m. in New York, according to Trace data.

“We are aware of the report and in the process of reviewing claims made therein,” an Equinix spokesperson said in an emailed statement. “We take these matters seriously, and we will not respond further to the claims during our review. We will report back once that review is complete, as appropriate.”

Hindenburg alleges that the nearly $80 billion real estate investment trust is manipulating its accounting for a key profitability metric – adjusted funds from operations – and overstated that figure by at least 22% in 2023. The short seller also said Equinix trades at elevated levels even if financials are taken “at face value.”

Equinix has determined not to proceed “at this time” with its planned offering of nine-year euro bonds, according to a person familiar with the matter, who asked not to be identified because they’re not authorized to speak about it. Demand was strong for the offering before it was pulled, with the company moving pricing tighter.

While it’s not unusual to pull a bond offering when big news breaks, the accusations in the report could make it tougher for Equinix to access capital if the company can’t adequately push back on the allegations, according to Bloomberg Intelligence analyst Jeffrey Langbaum.

Earlier this month, Equinix said Adaire Fox-Martin, who used to work at Google, will become its new president and chief executive officer in the late second quarter, with current CEO Charles Meyers moving to an executive chairman role. The company has been expanding its data center footprint, opening buildings in cities including Dublin and Frankfurt. In 2023, its revenue rose 13% from a year earlier, and its AFFO was up 11%. 

Jeffrey Langbaum, a senior industry analyst at Bloomberg Intelligence, said: “A report by Hindenburg detailing its short position on Equinix – based primarily on accounting practices that allegedly inflated profitability – paints an especially ugly picture when paired with the REIT’s management changes announced last week.”

The data center owner has said that accelerating growth in artificial intelligence is helping to drive demand for its properties. But Hindenburg argues that the AI boom poses a risk to Equinix’s outlook, as AI growth will potentially double power demands at Equinix’s properties and require many centers to be upgraded. And it’s accounting methods have given the market the impression that Equinix is a “cost-leading outlier” in the market, Hindenburg alleged. 

“This false impression, combined with general market euphoria for AI, has resulted in investors rewarding Equinix as though it is a key AI beneficiary, when the opposite seems true: AI poses a risk to Equinix’s already power-constrained facilities,” the short seller said.

Equinix said it’s confident in the company’s ability to create long-term opportunities through its “distinctive advantages.”

The firm also continues “to see Equinix as highly relevant to customers as they pursue their digital transformation agendas and deploy distributed, hybrid and multi-cloud infrastructure as the preferred architecture of choice,” the spokesperson said.