MEXDC: Future Prospects for Data Centers in Mexico

The Mexican Association of Data Centers (MEXDC) commemorated its first anniversary by sharing its perspectives and challenges concerning the data center industry’s development in Mexico. The association highlighted energy supply, infrastructure, and talent as its primary areas of focus for the next years.

A joint study by MEXDC and the International Data Corporation (IDC) revealed future projections for Mexico's data center industry. By 2029, the number of data centers in the country is expected to increase significantly, from the current 15 to an additional 73 new centers. This expansion will necessitate a substantial increase in energy demand, growing from the current consumption rate of 305 megawatts (MW) to over 1,490 MW.

The increased demand for data centers is driven by the intensified use of emerging technologies such as artificial intelligence (AI), augmented reality, virtual reality, and the metaverse. As this trend continues, Querétaro is anticipated to be a major hub for data center expansion due to its production of more than 50% of the nation's energy, followed closely by Mexico City and the State of Mexico, which together account for 23%.

To meet the low latency demands required by data centers for optimal deployment of these technologies, the Mexican Association of Data Centers (MEXDC) is promoting the expansion of edge data centers. The strategy focuses on establishing a greater number of smaller data centers across the republic, which aims to enhance the connection between the network edge and end devices.

Driven primarily by telecommunications companies, Mexico is expected to achieve the highest adoption rate of 5G technology in Latin America by 2025. This represents a significant opportunity for investments in telecommunications infrastructure and is poised to further support the growing demand for advanced data center capabilities.

Demand for colocation, cloud, and hyperscale services has surged due to accelerated digitization triggered by the pandemic and the expansion of artificial intelligence technologies, according to Amet Novillo, President of MEXDC. This trend has led to a 5.7% growth in the industry as of Q3 2023, effectively “positioning Mexico as a significant technology hub in Latin America.”

To address the industry's energy needs, MEXDC has projected an estimated investment of US$9 billion over the next five years, with funds coming from both established and new investors. Additionally, an estimated total of US$9 billion in direct investment and US$28 billion in indirect investment is anticipated over the same period for building the necessary supporting infrastructure. This boost in investment is expected to contribute significantly to the national GDP, estimated to reach 5.2% by 2029.

The industry's projected growth could create a total of 68,198 jobs by the end of 2029, encompassing both direct and indirect roles. The increased job creation, particularly in data center construction and operations, underscores the importance of developing and retaining specialized technology talent to meet growing market demand. To support the cultivation of this talent, MEXDC is developing specialized education programs in science and technology competencies through partnerships with academic institutions at both the undergraduate and graduate levels.