SM shies away from data centers, for now
Conglomerate SM Investments Corp. (SMIC) has deferred plans to enter the data center market as high power rates and typhoons discourage foreign investors from supporting this venture.
As a result, investors are instead eyeing data center facilities in neighboring countries with cheaper electricity, including Malaysia and Vietnam, SMIC president and CEO Frederic DyBuncio told reporters during a media gathering on Tuesday.
“They’re not really coming in yet … because they feel like the Philippines has too many natural calamities, and our cost of power is very expensive,” DyBuncio said.
Data centers are heavily dependent on reliable power supply, as these facilities house critical information technology infrastructure. Any power interruption could result in server downtime that can affect the businesses using data centers to operate.
He noted, however, that they were not entirely cancelling investments in the robust data center industry, especially since the government’s renewable energy targets remained attractive to foreign companies.
Last year, DyBuncio unveiled plans to explore the data center space due to growing demand for storage and increasing artificial intelligence (AI) use.
Back then, the CEO said they were looking at building SMIC’s first “cold shell,” or a partially completed data center facility composed of the building’s exterior, in an industrial park in Batangas province.
Last December, Leechiu Property Consultants reported that the Philippines ranked lowest in the Southeast Asian data center market with 1.81 watts per capita.
Still, Leechiu said the country had a robust 1,364-megawatt development pipeline, as companies were likely to continue integrating artificial intelligence into their daily tasks.
At the same time, SMIC expressed confidence in the country’s economic improvement, banking on recovering consumption to also drive the company’s growth.
“Our focus is to help and grow ourselves in the Philippines, where we feel that we can give more to the communities,” DyBuncio said.
The country’s largest company in terms of market capitalization recently announced a P60-billion share buyback program that is slated to be the biggest in Philippine corporate history.
