Data center firm Equinix has struck a $1 billion agreement to build three hyperscale data centers in Japan to serve global cloud players.
It has formed a JV with Singapore sovereign wealth fund GIC, which will provide 80% of the funds for the venture.
The two partners forged a similar $1 billion partnership to buy and build hyperscale data centers in Europe nine months ago.
Equinix Asia-Pacific president Jeremy Deutsch said the company already operates 11 enterprise data centers in Tokyo, connecting businesses with telecom networks and cloud providers.
But the planned hyperscale data centers are much higher density and dedicated to meeting the needs of big cloud and Internet players such as Amazon, Microsoft and Google.
Deutsch points out that the initial Tokyo facility, due to come online by year-end, will consume 45MW in power. By comparison, the existing Tokyo centers typically draw around 13MW.
The new data centers will provide interconnection and edge services and will tie into the big cloud companies' existing Equinix connections, the company said.
The Osaka center will go live in 2021, with the timing of a second Tokyo data center yet to be decided.
Jabez Tan, head of research at Structure Research, said in a February report that until recently Tokyo had been a market focused on retail colocation, "but things have quickly changed, and hyperscale is the primary driving force."
He said the vast majority of data center builds in the pipeline were now focused on hyperscale. He predicts that the segment, now accounting for about 25% of the Tokyo market, will rise to more than 40% by the middle of the decade.
Deutsch said the pivot to work-from-home in Asian markets in the past two months was also impacting demand for data center services.
He said the immediate effect had been to shift data traffic patterns away from sharp peaks and off-peaks "to a more consistent spread" across each day.
But it had also accelerated demand for digital transformation to support remote working.
Customers are needing to scale very quickly to support new applications and changing usage patterns, he said.
A lot are looking to deliver hybrid multicloud configurations. It could be a combination of public and private as well as multiple clouds, such as AWS and Azure, and they needed to "build that into an architecture and framework that can support their teams using apps such as Cisco Webex or Zoom," Deutsch said.
"These are the kinds of things that we're seeing accelerate."
— Robert Clark, contributing editor, special to Light Reading