{"id":305937,"date":"2025-10-23T14:26:20","date_gmt":"2025-10-23T04:26:20","guid":{"rendered":"https:\/\/www.vibewire.com.au\/?p=305937"},"modified":"2025-10-23T14:26:57","modified_gmt":"2025-10-23T04:26:57","slug":"what-impact-are-these-investments-expected-to-have-on-network-capacity-demand-in-australia-and-also-in-asia","status":"publish","type":"post","link":"https:\/\/www.vibewire.com.au\/?p=305937","title":{"rendered":"What impact are AI investments expected to have on network capacity demand in Australia and also in Asia?"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">The consensus is <a href=\"https:\/\/www.vibewire.com.au\/?p=305932\" target=\"_blank\" rel=\"noopener\" title=\"\">that these significant investments in AI-driven data centers will have a\u00a0<strong>massive and accelerating impact<\/strong>\u00a0on network capacity demand<\/a> across Australia and Asia.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The fundamental reason is the nature of Artificial Intelligence (AI) workloads, especially the training and inference of Large Language Models (LLMs) and other advanced AI applications, which require:<\/p>\n\n\n\n<ol start=\"1\" class=\"wp-block-list\">\n<li><strong>Enormous Processing Power and Storage:<\/strong>\u00a0This is the core driver of the data center capacity growth (measured in Gigawatts, or GW).<\/li>\n\n\n\n<li><strong>Low-Latency and High-Bandwidth Connections:<\/strong>\u00a0This is the direct driver of network capacity demand, particularly in\u00a0<strong>Data Center Interconnect (DCI)<\/strong>.<\/li>\n<\/ol>\n\n\n\n<p class=\"wp-block-paragraph\">Here is a breakdown of the expected impacts:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Australia<\/strong><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Massive Capacity Growth and Supply Gap:<\/strong>\n<ul class=\"wp-block-list\">\n<li>Australia&#8217;s live data center capacity is\u00a0<strong>forecasted to increase significantly<\/strong>\u00a0(e.g., from about\u00a01.4\u00a0GW\u00a0in 2025 to around\u00a01.8\u00a0GW\u00a0within three years, and the investable universe is expected to grow to circa A$46 \\text{billion} by 2029).<\/li>\n\n\n\n<li>Despite this growth, demand is outpacing supply, with an\u00a0<strong>estimated supply gap<\/strong>\u00a0of\u00a00.7\u00a0to\u00a01.7\u00a0GW\u00a0projected by 2028, highlighting the intense pressure on infrastructure.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Surge in High-Density Workloads:<\/strong>\n<ul class=\"wp-block-list\">\n<li>The computational intensity of AI is pushing\u00a0<strong>rack densities<\/strong>\u00a0(power per rack) to extremely high levels, often rising from\u00a030-40kW\u00a0to\u00a0<strong>over\u00a080kW<\/strong>\u00a0for modern AI deployments.\u00a0This concentrated power requires highly robust internal and external network connections.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Infrastructure Stress and New Hubs:<\/strong>\n<ul class=\"wp-block-list\">\n<li>The demand for power and connectivity is\u00a0<strong>straining existing infrastructure<\/strong>, with grid capacity constraints emerging in primary hubs like <a href=\"https:\/\/www.vibewire.com.au\/?tag=sydney\" target=\"_blank\" rel=\"noopener\" title=\"Sydney\">Sydney<\/a> and <a href=\"https:\/\/www.vibewire.com.au\/?tag=melbourne\" target=\"_blank\" rel=\"noopener\" title=\"Melbourne\">Melbourne<\/a>.<\/li>\n\n\n\n<li>This is driving the expansion of data centers into\u00a0<strong>secondary\/emerging hubs<\/strong>\u00a0like Melbourne (whose share is forecast to rise), Brisbane, and Perth, which in turn necessitates\u00a0<strong>new and upgraded high-capacity network links<\/strong>\u00a0connecting these sites both nationally and internationally.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Strategic Hub for Asia-Pacific:<\/strong>\u00a0Australia&#8217;s stability, regulatory environment, and access to subsea cables position it as an ideal launchpad for AI workloads across the Indo-Pacific, which will further\u00a0<strong>increase international network traffic<\/strong>\u00a0flowing through the country.<sup>14<\/sup><\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Asia-Pacific (APAC)<\/strong><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Exponential Network Traffic Growth:<\/strong>\u00a0Global data center experts predict at least a\u00a0<strong>6X\u00a0increase<\/strong>\u00a0in Data Center Interconnect (DCI) bandwidth demand over the next five years, with AI workloads believed to place the biggest demand on DCI.<\/li>\n\n\n\n<li><strong>Dominant Driver of Global Growth:<\/strong>\u00a0AI adoption is driving massive capacity additions across the region.\n<ul class=\"wp-block-list\">\n<li>Generative AI is expected to account for a significant portion of the increase in data demand.<\/li>\n\n\n\n<li>The Asia-Pacific region is predicted to\u00a0<strong>double its data center capacity<\/strong>\u00a0within the next five years, with an additional\u00a02\u00a0GW\u00a0coming online each year, driven by countries like Japan, South Korea, Indonesia, Malaysia, and Australia.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Decentralisation and Edge Computing:<\/strong>\u00a0As AI workloads like training Large Language Models (LLMs) become more distributed across different facilities, and inference workloads are deployed closer to users at the &#8220;edge&#8221; to reduce latency, the need for\u00a0<strong>Managed Optical Fiber Networks (MOFN)<\/strong>\u00a0and\u00a0<strong>high-capacity fiber connectivity<\/strong>\u00a0between these distributed centers will accelerate dramatically.<\/li>\n\n\n\n<li><strong>New Regional Hotspots:<\/strong>\u00a0High demand and limited resources in traditional hubs (like Singapore and Hong Kong) are pushing investment into\u00a0<strong>secondary markets<\/strong>\u00a0in Southeast Asia (e.g., Indonesia and Malaysia, which have projected capacity growth rates between\u00a032%\u00a0and\u00a056%\u00a0CAGR), leading to new subsea cable and terrestrial network routes being developed to support this infrastructure.<\/li>\n\n\n\n<li><strong>Bandwidth Intensity:<\/strong>\u00a0To cope with the data demands,\u00a087%\u00a0of data centre experts anticipate needing a fibre optic capacity of\u00a0<strong>800\u00a0Gb\/s\u00a0or higher per wavelength<\/strong>\u00a0for DCI.<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">In summary, the AI investment boom is creating a virtuous cycle of&nbsp;<strong>massive capacity expansion, exponential traffic growth, and an urgent need for network upgrades<\/strong>&nbsp;that support ultra-high density and low-latency connections both within and between data center hubs across Australia and the broader Asia-Pacific region.<sup>27<\/sup><\/p>\n","protected":false},"excerpt":{"rendered":"<p>AI investment boom is creating a virtuous cycle of\u00a0massive capacity expansion, exponential traffic growth, and an urgent need for network upgrades\u00a0that support ultra-high density and low-latency connections.<\/p>\n","protected":false},"author":24,"featured_media":305940,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_uf_show_specific_survey":0,"_uf_disable_surveys":false,"footnotes":""},"categories":[213,35,12785,9281],"tags":[9939,2809],"class_list":["post-305937","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-ai","category-breaking-news","category-data-centre","category-telecommunications","tag-asia","tag-australia"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vibewire.com.au\/index.php?rest_route=\/wp\/v2\/posts\/305937","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vibewire.com.au\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vibewire.com.au\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vibewire.com.au\/index.php?rest_route=\/wp\/v2\/users\/24"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vibewire.com.au\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=305937"}],"version-history":[{"count":2,"href":"https:\/\/www.vibewire.com.au\/index.php?rest_route=\/wp\/v2\/posts\/305937\/revisions"}],"predecessor-version":[{"id":305943,"href":"https:\/\/www.vibewire.com.au\/index.php?rest_route=\/wp\/v2\/posts\/305937\/revisions\/305943"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vibewire.com.au\/index.php?rest_route=\/wp\/v2\/media\/305940"}],"wp:attachment":[{"href":"https:\/\/www.vibewire.com.au\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=305937"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vibewire.com.au\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=305937"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vibewire.com.au\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=305937"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}