The opportunities and challenges of data center industry in 2022

The data center industry is gearing up for a broader adoption of liquid cooling tech in 2022.


Data centers play a critical role in driving the modern economy. However, the exponential rise in data centers — in lock step with the massive shift to cloud computing– has taken a toll on the environment.

Taking cognisance, the technology community is mulling ways to offset the trail of carbon footprints data centers leave in its wake. Here, we discuss the challenges data centers pose in 2022:


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Environmental concerns

According to Statista, the energy requirement for traditional data centers has declined from around 97.6 terawatt hours in 2015 to 50 terawatt hours in 2019. On the other hand, hyperscale data centers’ energy demand doubled during the same period.

Data centes are energy guzzlers. In light of their higher power consumption, many companies are building their data center programs on the back of green technologies. According to The 2021 State of the Data Center Report by AFCOM, 65% of companies are turning to renewable energy sources. 20% of these companies have an active renewable energy strategy and many are within the three-year range of deployment.

Supply chain disruptions

The data center industry was badly hit by the supply chain disruption brought on by the pandemic. Labour shortage and the undersupply of equipment have caused delay in the development of new facilities and impacted refresh cycles of data centers. Companies are purchasing equipment well in advance and also using mergers and acquisitions to overcome the challenge. 2021 was rife with ‘supply chain deals’.

Panasonic acquired Blue Yonder for USD 7.1 billion in April, 2021 for the autonomous enhancement of the whole supply chain. In September 2021, Project44 acquired Convey to upgrade their last-mile connectivity.

Experts believe 2022 will also see a lot of M&A activity to ensure the supply of critical components for data centers.

Liquid cooling

The data center industry is gearing up for broader adoption of liquid cooling tech in 2022. The demand from powerful new hardware for AI workloads, pressure to eliminate water use in cooling servers, and also the progress of liquid cooling tech are prompting an overhaul of the current systems.

Microsoft has already started using immersion-cooled servers in production on its campus in Quincy, Washington. The company had been testing cooling technology used in bitcoin mining facilities. Here, servers are dunked in tanks of cooling fluid to manage rising heat.

“We are the first cloud provider that is running two-phase immersion cooling in a production environment,” said Husam Alissa, principal hardware engineer, Microsoft’s data center team.

In November, Digital Realty also started offering liquid-cooled servers in Digital Loyang 1 (SIN11) facility, Singapore and slashed the power consumption to up to 29 per cent compared with the conventional air-cooled servers.

Advancements like Metaverse calls for dense compute, varying latencies, and massive storage requirements. Some applications might also require proximity to dense population centers. The infrastructure needed to support concepts like the Metaverse translate to the demand for more physical locations offering ultra-low latency.

AI models are becoming big and complex. Web3 and blockchain rely heavily on traditional cloud and data centers.

Indian context

The Joint Parliamentary Committee (JPC) has recently adopted the report on the Personal Data Protection Bill 2019, and is expected to be tabled in the Parliament soon. It can change the way data center companies operating in India.

A mandate on data localization will be a massive boost for local service providers. The Bill is also expected to generate thousands of new jobs for IT specialists and data engineers.

According to a Savills India report, 5G, IoT, AI and Cloud is expected to generate a demand of 15 to 18 million square feet for data centers. Companies in India are realising the potential of edge data centers. Tier-II cities like Ahmedabad, Coimbatore, Bhubaneshwar, Jaipur, Kochi, Nagpur, Vizag, Lucknow is expected to see massive investments in this space.

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Meeta Ramnani
Meeta’s interest lies in finding out real practical applications of technology. At AIM, she writes stories that question the new inventions and the need to develop them. She believes that technology has and will continue to change the world very fast and that it is no more ‘cool’ to be ‘old-school’. If people don’t update themselves with the technology, they will surely be left behind.

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