CIMB Securities said in a note on Wednesday that despite concerns over a shift in the US government’s artificial intelligence (AI) chip policies and the emergence of DeepSeek, Malaysia remains an attractive proposition for global data center hyper scalers.

Based on the projected pipeline of new data center projects totaling 1,313 MW (end-2024: 505 MW), the research house estimated that this would translate into $5.3 to $6.6 billion worth of job opportunities for the local construction industry over the next decade.

It also reaffirmed its stance that prospects for inbound data center infrastructure investments in Malaysia will remain intact, and should accelerate in the coming quarters despite various external challenges.

“While we acknowledge that the sudden emergence of DeepSeek and further shifts in the US government’s AI chip policies may prompt a near-term review, Malaysia’s resource-rich status and balanced diplomatic stance ensure that the nation remains competitive as an emerging data center hub and a key enabler in the global AI race,” it said.

According to the research house, it has not seen any tangible signs of a significant cutback in AI investments by leading technology companies despite the rapid emergence of low-cost AI technology providers such as DeepSeek and the rollout of the US government’s AI diffusion rules.

It is noted that Quartz reported that the four big tech companies — Meta, Microsoft, Google, and Amazon – could spend a combined $320bn on AI development and infrastructure in 2025.

Concurrently, the Stargate Project, led by OpenAI and Japan’s SoftBank, will invest $500 billion over the next four years to develop new AI infrastructure in the US.

Besides this, CIMB posited that the redirection of data center investments back to US soil actually increases the export quota for advanced graphic processing units, alleviating some of the supply caps on total computational power Tier-2 countries, such as Malaysia, have access to under the US’ new AI chip rules.

Broadcom’s strong revenue guidance for the second quarter of its fiscal year 2025 may also help shore up investor confidence in AI-related spending, underlining a greater push among hyperscale cloud providers to diversify their processor sources, it added.

CIMB also highlighted that in Malaysia, the US government’s tightened control on advanced chips has not stifled substantial land deals for large-scale data center investments.

It is noted that in Jan 27, 2025, Microsoft’s data center unit Microsoft Payments (Malaysia) acquired a 22.5-acre plot of land in Nusa Cemerlang Industrial Park from Crescondo Corp for MYR 120 million ($27 million), its fourth purchase in Johor.

This was quickly followed by Eco World signing an agreement on Feb 25, 2025 to build and lease 92 acres of land at Eco Business Park V in Puncak Alam, Selangor, to Google for MYR 4.8 billion ($1.08 billion).

Similar to the build-and lease arrangements that Google has struck with Sime Darby Property, Eco World has entered into a 20-year lease with Google (plus options to extend for two 5-year periods) and has simultaneously sold another 58-acre tract at Eco Business Park V for MYR 266 million ($59.88 million).

Meanwhile, the increased land banking activities reflects a robust pipeline of data center projects that are steadily taking shape in Malaysia, said CIMB.

As the chair for ASEAN 2025, it noted the pursuit of large-scale data center investments is at the core of Malaysia’s aspirations to be a regional digital powerhouse.

The country’s digital economy is projected to contribute 26 percent of national gross domestic product (GDP), consistent with the 12th Malaysia Plan (12MP) targets.

Consequently, CIMB opined that more AI and digital infrastructure will be required to support Malaysia’s digital transformation.

To this end, two strategic initiatives between Google and Malaysian government agencies were introduced in mid-Dec 2024 — “AI at Work” and “AI Policy and Skilling Lab” — in conjunction with the launch of Malaysia’s National AI Office, which aims to transform public service delivery
through generative AI applications.

At the company level, Gamuda has a head start via its 50:50 partnership with Dagang NeXchange (DNex) to provide Google Distributed Cloud air-gapped services in Malaysia, as well as its acquisition of a 20 percent stake in Cloud Space, a Google Cloud Premier Partner.

Cited Knight Frank’s Data Center Research Report 2024, CIMB said that Malaysia secured MUR 141 billion ($31.74 billion) in digital investments for the first 10 months of 2024 — three times the total amount the country secured in 2023.

This was underpinned by $23 billion worth of strategic investments between Dec 2023 and Oct 2024 that Malaysia successfully secured from tech giants Nvidia, Microsoft, Google, ByteDance, Amazon Web Services (AWS), and Oracle for
AI and cloud infrastructure.

According to Knight Frank’s Data Center Research Report 2024, Malaysia has 61 upcoming data centers offering a total information technology (IT) capacity of 1,313 MW.

Based on a projected data center capital expenditure (capex) of $6 million/MW, CIMB estimated that these could provide up to MYR 35 billion ($7.88 billion) worth of building opportunities over the next five to ten years.

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