Equinix Says Smaller Data Centers May Avoid U.S. Construction Restrictions
Equinix's Asia-Pacific president says the company's typical 30-60 megawatt facilities fall below the 100-megawatt threshold targeted by proposed U.S. regulations.
At a glance
- Equinix's typical 30-60 MW data centers are below the 100 MW threshold targeted by U.S. regulatory proposals.
- BMI reports 53% of U.S. hyperscaler growth is in states where new governors could restrict data center construction.
- Equinix capex rose to $7 billion as Q3 gross bookings topped $500 million, driven by Fortune 500 demand.
Equinix says its smaller data centers could be less exposed to potential U.S. construction restrictions as regulators scrutinize the rapid buildout of artificial intelligence infrastructure. Cyrus Adaggra, the company's Asia-Pacific president, told CNBC's "Squawk Box Asia" that Equinix facilities typically range from 30 to 60 megawatts, below the roughly 100-megawatt threshold targeted by U.S. proposals.
"We will invest in markets where we see customer demand, and because we have a footprint that is typically less than 100 megawatts, we tend not to fall and be caught by the legislation or the regulation," Adaggra said.
His comments follow U.S. midterm election results that have heightened concerns about new restrictions on data center development. A Wednesday report from BMI, a Fitch Solutions company, found that about 53% of projected growth in the U.S. hyperscaler development pipeline is concentrated in states where newly elected governors could impose restrictions. BMI said any impact would likely become more apparent from 2028, as most projects planned for 2027 are already committed.
Capital spending and demand Equinix has increased capital spending from about $2 billion a few years ago to $7 billion, driven by growing customer demand. Annualized gross bookings exceeded $500 million for the first time in the third quarter, up 35% from a year earlier. Adaggra said growth was driven by large enterprises, including Fortune 500 companies, investing in hybrid and multi-cloud infrastructure. Equinix serves about 60% of Fortune 500 companies.
Supply chain and Asia shift Potential restrictions could raise costs across the AI infrastructure supply chain, according to Russell Investments, which also flagged that slower U.S. construction could weigh on demand for semiconductors and other equipment from Asian suppliers.
Asia is emerging as a major destination for data center investment. "After the U.S., we expect actually most data center investments and activity to happen in Asia," said Sjoerd Leenart, CEO of JPMorgan's banking business in Asia Pacific. Global hyperscalers are seeking Asian markets with sufficient land, electricity and grid capacity. Mirae Asset Securities said South Korea could emerge as a key market, though WTW noted that power availability, grid connectivity and equipment delays remain challenges. Leenart also pointed to regulatory pushback in Thailand and Australia, where authorities have paused some projects to assess energy demand impacts.
Source: CNBC Top News.
Questions and answers
- Why does Equinix think it will avoid U.S. data center restrictions?
- Equinix facilities typically range from 30 to 60 megawatts, below the roughly 100-megawatt threshold targeted by proposed U.S. legislation.
- What impact could U.S. restrictions have on the AI supply chain?
- Russell Investments says restrictions could raise costs across the AI infrastructure supply chain and weigh on demand for semiconductors and equipment from Asian suppliers.
- Where is data center investment shifting besides the U.S.?
- JPMorgan's Asia Pacific CEO expects most data center investments after the U.S. to happen in Asia, with South Korea highlighted as a potential key market.
