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KUALA LUMPUR: DeepSeek led to some initial questions about the durability of Malaysia’s data centre boom, but those fears are turning into excitement as the situation becomes more clear, according to analysis released yesterday by Juwai IQI co-founder and group CEO Kashif Ansari.

He said DeepSeek shocked the world with a large language model that seems comparable to those offered by competitors like OpenAI at a fraction of the cost.

“Cheaper AI models like DeepSeek’s will most likely drive demand for data centres in Malaysia even higher. That’s because cheaper AI would enable widespread use of AI-powered tools that until now have been too expensive to be widely adopted. A survey in November found that financial concerns were the main obstacle keeping businesses from adopting AI,” he added.

He said large language models need to become inexpensive before AI can be widely used and DeepSeek seems to have made massive progress in this area.

Its price for tokens, or output, is just one-fifteenth that of more established competitor Anthropic. Now that large language models are cheap enough to be used widely, we will likely see skyrocketing adoption of AI-related tools. You can put it this way: when it costs less to get an AI model to do any one thing, people will ask AI to do more and more things. That growth will create unprecedented demand for data centres, including in Malaysia,” Ansari remarked.

“Some prominent analysts support this conclusion. Morgan Stanley calculates that demand for power in Asia-Pacific, excluding China, will climb by 4% if tech companies accelerate their investments as a result of a drop in AI’s energy intensity,” he said.

For the real estate industry here in Malaysia, Ansari noted that this means that demand for land suitable for data centres will remain strong and could possibly grow.

“Not all data centres are suitable for serving the coming AI boom, but Malaysia is well positioned for a world where AI dominates data centre development. Data centres that were built to support enterprise IT, cloud computing, and general-purpose workloads are not optimised for the higher demands that AI requires. They can lack the power, cooling, and networking that are needed for AI,” he pointed out.

On the other hand, he said Malaysia has a pipeline of billions of dollars of planned data centres that are largely AI-ready. Supportive government initiatives and substantial investments from companies like Nvidia, ByteDance, Google, AWS, and Microsoft have ensured this is the case.

“The Malaysian data centre development pipeline consists of 1.2 GW, which represents 600% growth over the next five years. About 55% of new projects are planned for the KL area, and the other 45% will go into Johor,” said Ansari, adding that Blackstone, one of the world’s largest financial investors in AI infrastructure, believes the world will need to spend US$2 trillion (RM8.9 trillion) on data centres over the next five years.

He said Malaysia is well positioned to capture a significant share of this growth, and Johor is the fastest-growing Southeast Asian market.

“Data centre builders are tailoring their projects for AI applications. Look at YTL Power, whose green data centre park in Johor will incorporate advanced direct-to-chip liquid cooling to enable the highpower densities that AI processing requires,” he added.

“Whether or not DeepSeek ends up permanently changing the AI industry, we believe data centre demand will continue to increase. Luckily for Malaysia, the country retains all its advantages in attracting these facilities. The key advantages that make Malaysia a prime location for data centre development include its relatively low-cost land and energy, skilled workforce, strong digital infrastructure, government incentives, and connectivity to major markets like Singapore, Asean, and China,” said Ansari.

“Energy is a key component of operating costs, so let’s look at that as an example. In Malaysia, industrial power tariffs are about US$0.10 per kilowatt-hour (kWh). That compares favourably to Singapore’s higher rates of approximately US$0.27 per kWh,” he said.

In other ways also, he added Malaysia will be a winner in a world where artificial intelligence is cheaper and more available than it has been.