en.Wedoany.com Reported - NTT Data Group Corp. plans to invest at least $9 billion by 2033 to quadruple its computing capacity to 1 gigawatt, responding to rapidly growing demand for artificial intelligence computing power in the Japanese market.
The company, Japan's largest data center operator, is a subsidiary of government-backed NTT Inc. According to sources familiar with the matter, the company plans to add approximately 750 megawatts of capacity over the next seven years to meet the needs of businesses looking to ride the AI wave.
Based on an estimated investment of 2 billion to 2.5 billion yen per installed megawatt of data center capacity (excluding costs for AI accelerators from vendors such as Nvidia), the total construction and equipment installation costs would amount to at least 1.5 trillion yen (approximately $9.6 billion). Sources indicated that the scale of investment may be adjusted in response to changes in prices and computing demand; a spokesperson for NTT Data, citing company policy, declined to comment on the investment plan.
According to Yasuo Suzuki, who oversaw NTT Data's data center operations in the Asia-Pacific region until July this year, computing demand is expected to grow in tandem with the size of Japan's economy, the world's fourth largest. Compared with global competitors such as Digital Realty Trust Inc. and Equinix Inc., NTT Data is responding to client interest representing approximately 100 megawatts of AI inference capacity demand.
Regarding construction progress, the company plans to add 42 megawatts of capacity this year and begin construction of a 100-megawatt data center in Tochigi Prefecture, north of Tokyo, next year. For the current fiscal year ending next March, NTT Data's data center spending is expected to increase by approximately 33% to about $3.3 billion.
Suzuki noted that with few participants in data center construction, supply is limited while demand is strong, so competition is not intense. Despite doubts about long-term demand and concerns that big tech companies are overbuilding data centers weighing on global AI-related stocks, NTT Data has seen little sign of demand slowing.
Companies such as Amazon Web Services and Microsoft Corp. are racing to expand their data center footprints in Japan while also seeking additional capacity from NTT Data. Global cloud service providers account for more than 80% of the revenue from NTT Data's Japanese subsidiary's data center business.
A bigger constraint lies in the shortage of grid capacity, as power-hungry data centers struggle to secure rapid access to electricity. NTT Data relies on partnerships with utility companies such as Tokyo Electric Power Co.; areas like Inzai City in Chiba Prefecture, east of Tokyo, have long faced transmission capacity shortfalls, and it may take 8 to 10 years to obtain the necessary power connection approvals. Suzuki said that due to these bottlenecks, data center capacity is occupied by clients as soon as it becomes available. SoftBank Corp. is considering investing in Tokyo Electric Power Co. to secure electricity supply for its data center plans.
