The Latin America data center market is a vibrant and evolving space with its own unique opportunities and challenges. In this blog post, we explore insights shared by Steve Sasse, datacenterHawk's regional director for Latin America, on the region's data center landscape. With extensive experience in the telecom industry and deep knowledge of the Latin American market, Sasse offers valuable perspectives on navigating this fast-growing market.

Understanding the Latin American Market

Companies must adapt to various laws and regulations across different countries in Latin America. One critical factor to consider is the inflation rate, which varies across the region. Providers often incorporate price increases into their contracts to mitigate the impact of inflation. Additionally, currency devaluation is common, requiring careful consideration of contract currency to protect against potential losses.

Unique Connectivity Challenges

Latin America faces connectivity challenges due to limited intra-regional connectivity. While markets like Brazil and Chile have established hyperscale cloud nodes, the lack of interconnection between countries within the region hampers low-latency connectivity. To address this, hyperscale providers are now focusing on establishing localized or regional cloud nodes to improve connectivity and reduce latency.

Primary Markets and Data Center Density

Data center density is concentrated in primary markets, usually the capital cities or largest metropolitan areas. Secondary markets are limited, with some existing primarily due to submarine cable capacity and landings. Despite the presence of secondary markets, data center activity remains concentrated in the largest metropolitan areas.

Addressing Underdeveloped Digital Infrastructure

Compared to the United States and the United Kingdom, Latin America has underdeveloped digital infrastructure, highlighting the potential for growth and investment in the region's data center market. This emphasizes the need for extensive infrastructure development to improve connectivity and reduce latency.

The Rising Data Center Hub: Mexico

Mexico is emerging as a thriving market in Latin America, witnessing impressive data center construction and expansion. The city of Querétaro is gaining attention as a burgeoning data center hub, with growing data center ecosystem. Notably, Mexico's fiber connectivity is primarily terrestrial, unlike other Latin American countries, which rely on submarine cables.

Conclusion

Latin America's data center market presents unique opportunities and challenges. As the region continues to develop its digital infrastructure, companies must adapt to diverse laws, regulations, and market conditions. Addressing connectivity challenges and establishing localized cloud nodes are crucial for efficient data transmission within Latin America. With Mexico emerging as a significant player in the market, the region is poised for further expansion, making it an exciting space for data center investment and innovation.