Japan Data Center Market is growing at a CAGR of 9.29% due to the Increasing Demand for Cloud Services and Digital Transformation

Japan Data Center market is witnessing robust growth in demand due to the increasing demand for cloud services and digital transformation, government initiatives such as the "Society 5.0" project, and the adoption of advanced technologies like AI, IoT, and edge computing.

According to the Markets and Data Research report, “Japan Data Center Market Assessment, By Region, Opportunities, and Forecast, FY2018-FY2032F," the Japan data center market was valued at USD 17.59 billion in FY2024. The market is expected to grow at a CAGR of 9.29% to reach USD 38.18 billion by FY2032F. Japanese businesses are increasingly adopting digital technologies as part of their modernization efforts. Cloud computing, in particular, has become an essential tool for companies looking to enhance operational efficiency, scalability, and innovation, which is the key driver for the growth of the data center market in Japan. Moreover, the Japanese government is planning to provide incentives for locating data centers on Hokkaido, Japan’s northernmost island, further fueling Japan data center market growth. This region boasts abundant renewable energy resources, making it an attractive location for energy-intensive data centers, which further accelerates market growth.

The upward trend in Japanese cloud computing consumption has created substantial market expansion for data centers in the country. Digital transformation in businesses has driven the essential need for cloud services to store, manage, and process increasingly vast volumes of data. Traditional industries, along with tech startups in Japan, are adopting cloud-based solutions, which is leading to a strengthening market demand for data centers. Additionally, the ongoing development of artificial intelligence (AI), the Internet of Things (IoT), and 5G networks is significantly driving data center expansion in Japan because these technological networks need substantial computing power, together with quick response infrastructure, to function properly.

Furthermore, many prominent players within the data center market are strengthening their operations in Japan to serve rising business and government institution requirements in the country. For instance, in April 2024, Oracle Corporation Japan announced USD 8 billion investment plans to meet the growing demand for cloud computing and artificial intelligence (AI) infrastructure in Japan over the next 10 years. Also, the firm expanded its operations and support engineering teams with Japan-based personnel to help customers and partners address the digital sovereignty requirements in Japan.

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Spread through 122 pages, the "Japan Data Center Market" report includes an in-depth TOC, over 27 market data figures, the latest market developments, key drivers and opportunities, and a thorough study of major company profiles. Moreover, the report offers strategic recommendations, pricing analysis, market share analysis, and value chain analysis in detail.

Key Takeaways:

• The upward trend towards the growing consumption of cloud computing services, along with the growing digital transformation in businesses, has been driven by the country’s focus on environmental sustainability goals has driven innovation and various investments within the Japan data center market landscape.
• Growing government initiatives and policies to prioritize data and infrastructure development as a part of its digital transformation strategy to support the growing digital economy are anticipated to fuel the growth and demand of the Japanese data center market.
• The increasing adoption of colocation data center services, along with the rising demand for cloud services, data storage, and digital transformation, and with additional factors like e-commerce growth, remote work, hybrid cloud strategies, and advancements in AI and machine learning, the Japan data center market is expected to experience robust growth.

The Japan data center market is segmented into the following categories:

By Data Center Rating: Tier I, Tier II, Tier III, Tier IV

By Type: Enterprise Data Centers, Colocation Data Centers, Cloud Data Centers, Hyperscale Data Centers, Edge Data Centers, Others

By Infrastructure: IT Infrastructure, Electrical Infrastructure, Mechanical Infrastructure, General Construction, Support Infrastructure

By Enterprise Size: SMEs, Large Enterprises

By End-User: IT and Telecom, Banking, Financial Services, and Insurance (BFSI), Healthcare, Government, Energy, Others (Education, Entertainment, Real Estate, etc.)

By Region: North, Central, South

Based on the data center rating segment, the Tier III data center currently holds nearly two third of the Japan data center market, as of FY2024. This segment is projected to grow significantly in year to come and the anticipated growth is attributed to this facility’s balanced offering of reliability, scalability, and cost-efficiency. They ensure a high uptime of 99.982%, translating to less than 1.6 hours of downtime annually. Such reliability is crucial for businesses in industries such as finance, healthcare, and e-commerce, where uninterrupted operations are essential. This need for consistent performance is driving demand in the segment.

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Major Companies Operating in the Japan Data Center Market include:

• Nippon Telegraph and Telephone Corporation
• NEC Corporation
• Equinix, Inc.
• KDDI Corporation
• Digital Realty Trust Inc.
• IDC Frontier Inc.
• AT TOKYO Corporation
• Fujitsu Limited
• ITOCHU TECHNO-Solutions Corporation
• Airtrunk Operating Pty Ltd

The Japan data center market is moderately fragmented, with a diverse array of key players contributing to the growth of the market. Key players are heavily investing in expanding their data center facilities to cater to the growing demand for cloud services, data storage, and digital transformation. For instance, in January, 2024, Amazon Web Services, Inc. unveiled its JPY 2.26 trillion investment plans into its existing cloud infrastructure in Tokyo and Osaka by FY2027 to cater to the growing customer demand for cloud services in Japan. The AWS Economic Impact Study (EIS) for Japan reported that the investment is anticipated to contribute JPY 5.57 trillion to Japan’s Gross Domestic Product (GDP) and support an estimated average of 30,500 full-time equivalent (FTE) jobs in local Japanese businesses each year. Furthermore, many prominent key players are also contributing to the Japanese data center market growth by forming strategic collaborations and partnerships to solidify their presence within the market. For instance, in August, FY2024, Singapore Telecommunications Limited and Hitachi, Ltd. formed a strategic partnership to contribute to next-generation data centers and Graphics Processing Units (GPUs) Cloud in Japan and potentially the wider Asia Pacific region under the lead of Singtel's Digital InfraCo unit. The collaboration will combine Singtel's extensive data center and connectivity expertise and technology platforms with Hitachi's differentiating capability that enables end-to-end data center integration, including green power solutions, cooling systems, storage infrastructure, and data management.

“Japan Data Center Market Assessment, FY2018 - FY2032F” evaluates the future growth potential of the Japan data center market and provides statistics and information on market size, structure, and future market growth. The report intends to provide advanced market intelligence and help decision-makers make investment decisions for their organizations more strategically. Moreover, the report identifies and examines the emerging trends along with key drivers, challenges, and opportunities in Japan data center market.

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