Dec 01, 2023 09:50 AM EST
When the American chip company Nvidia released its impressive third-quarter earnings last week, industry watchers noted that a sizable portion of its income originated from a single little country.
Singapore, a U.S. city, accounted for around 15%, or $2.7 billion, of Nvidia's sales during the quarter that ended in October filed with the Securities and Exchange Commission. Singapore's sales increased by 404.1% in the third quarter compared to $562 million in revenue during the same period last year. This exceeded Nvidia's 205.5% revenue increase during the previous year.
Maybank Securities analyst Jarick Seet suggested that the increased import of chips into Singapore could be attributed to the presence of numerous data centers and cloud service providers in the country.
According to Seet, the chips may also be sent to Singapore for final assembly, possibly with other products, before being shipped to other countries. Additionally, he noted potential applications for the chips in artificial intelligence, computing, and electric vehicles.
Sang Shin, a former executive at Temasek and GIC, echoed these sentiments, emphasizing the role of Singapore as a hub for building data centers. In a LinkedIn post, Shin, who previously held positions as director of digital innovation at Temasek and head of digital strategy and architecture at GIC, highlighted the city-state's utilization of the chips in line with its focus on digital infrastructure.
According to the same SEC filing, the data center category accounted for 80% of Nvidia's third-quarter revenue; the remaining percentage came from gaming, professional visualization, automotive, and other industries.
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Nvidia, in a filing, reported that cloud service providers accounted for approximately half of data center revenue, with the remaining portion divided between consumer internet companies and enterprises.
Nvidia did not provide the revenue breakdown per business category in Singapore.
According to a November 27 report by Citi analysts, there was a notable purchase of data center solutions in Q3 by a specific consumer internet company for deployment in Singapore's data centers. The report also highlighted Singapore as a growing region for specialized cloud service providers (CSPs) establishing data centers in the area.
Singapore removed a ban in January 2022 that had been put in place in 2019 to try and slow the expansion of data centers by temporarily pausing the release of land for such purposes. Following that, in July, Singapore granted permission for the development of new data center projects in Singapore to Equinix, Microsoft, GDS, a Chinese supplier of data center systems, and an alliance between AirTrunk and ByteDance.
As of January 2022, Singapore had around 70 data centers in operation. Sixty percent of all data centers in Southeast Asia are still located in this city-state.
According to a Cushman and Wakefield analysis, Singapore ranked first in Asia Pacific and third internationally in terms of data center market rankings. In the United States, Portland and Northern Virginia tied for first place, with Hong Kong placing fourth.
According to a report by the International Trade Administration, the demand for data centers in Singapore is expected to remain high. The rapid growth of digital applications, e-commerce, the Internet of Things, artificial intelligence, crypto-trading, blockchain activities, online gaming, and other factors contribute to this sustained demand. The report notes that the shift to hybrid working and the digitalization of businesses further contribute to the need for data center space in Singapore.
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