Chinese cloud computing companies expanding abroad

Spending on data center infrastructure services forecast to grow 19% this year

Chinese cloud computing companies have ramped up efforts to expand their footprint in overseas cloud service markets, as an increasing number of businesses are leveraging the cutting-edge artificial intelligence technologies to bolster digital transformation and upgrades.

Alibaba Cloud, the cloud computing arm of Chinese tech giant Alibaba Group, recently announced the launch of its first data center in Mexico as part of a broader drive to accelerate the construction of digital infrastructure abroad.

The new data center, the first of the company's kind in Latin America, will provide cloud computing services to local businesses and developers, underscoring Alibaba Cloud's commitment to accelerating Mexico's digital transformation and fostering innovation throughout the region.

With the addition of this new data center, Alibaba Cloud's global infrastructure now spans 87 availability zones across 29 regions, the company said.

Selina Yuan, president of international business at Alibaba Cloud Intelligence, said: "We are not only bringing cloud technology to support local businesses, but also building an inclusive and thriving ecosystem in Mexico together with local partners, developers and customers to foster innovation, collaboration and sustainable growth across Latin America."

Yuan added that by leveraging Alibaba Cloud's global network, Mexican companies can tap into other markets, especially those in Asia. More and more enterprises are using data centers to host or manage computing infrastructure for their AI projects.

The facility in Mexico was launched six days after Alibaba Cloud announced in mid-February that it would commence operations at its second data center in Thailand to meet the country's growing demand for cloud computing services and support generative AI applications.

The company opened its first data center in Thailand in 2022 and this latest expansion follows the company's announcement in May that it would expand its data center network across Asia, including Malaysia, the Philippines, South Korea and a cloud region in Mexico.

The data center in Thailand has not only played a pivotal role in supporting Thai businesses across a diverse array of sectors, including technology, media, retail, fintech and public services, but also helped local enterprises enhance operational efficiency and accelerate digital transformation.

Alibaba Group recently announced that it would invest more than 380 billion yuan ($52.3 billion) in building cloud and AI hardware infrastructure over the next three years.

"Our planned investment in cloud and AI infrastructure over the next three years is set to exceed what we have spent over the past decade," said Wu Yongming, CEO of Alibaba Group, in an earnings call with investors in February.

Wu noted that the company will increase investment in the research and development of AI applications and computing power, and deeply integrate AI across its businesses to capture new growth opportunities in the AI era.

Tencent Cloud, Tencent Holdings Ltd's cloud computing arm, is stepping up the push to help overseas enterprises realize digital transformation by leveraging AI-powered cloud services.

The company recently announced that it will build its first Middle East data center in Saudi Arabia, with a total investment of more than $150 million in infrastructure construction over the next few years, marking a significant step in the company's global expansion.

Hu Dan, vice-president of Tencent Cloud International for the Middle East and North Africa, said the new data center will strengthen the company's ability to support Saudi Arabia's digital transformation journey across key sectors, including digital media and streaming, video gaming, esports, e-commerce, tourism, financial services and telecommunications.

Pan Helin, a member of the Expert Committee for Information and Communication Economy, which is part of the Ministry of Industry and Information Technology, said Chinese enterprises that are making forays into overseas cloud service markets should not only improve the construction of cloud infrastructure abroad, but also enhance innovative capacities in key software applications, so as to better serve global clients.

According to global market consultancy Canalys, global cloud infrastructure services spending stood at $321.3 billion in 2024, rising 20 percent year-on-year. The key driver behind this growth was the expansion of AI models, which significantly accelerated cloud adoption.

Canalys has forecast that spending on global cloud infrastructure services will grow 19 percent year-on-year in 2025. As AI becomes more efficient and widely adopted, demand is expected to grow exponentially. In response, cloud service providers are making significant investments to grow AI model training, deployment and cloud-based applications globally, the consultancy added.