China Artificial Intelligence (AI) Optimised Data Center Market

China Artificial Intelligence (AI) Optimised Data Center Market Analysis

The China Artificial Intelligence Optimised Data Center Market size is estimated at USD 19.08 million in 2025, and is expected to reach USD 50.36 million by 2030, at a CAGR of 21.42% during the forecast period (2025-2030).

China has been focusing on the development of artificial intelligence (AI) data centers to support its technological ambitions. Over the past two years, more than 500 new data center projects have been initiated across various regions, including Inner Mongolia and Guangdong. By the end of 2024, at least 150 of these facilities will be operational, with investments coming from state-owned enterprises, publicly traded companies, and state-affiliated funds. Local governments have also been involved in these initiatives, aiming to establish their regions as AI hubs and drive economic activity.

Advancements in AI-related hardware and software are shaping the future of data centers in China. The development of chips optimized for inference tasks, such as Nvidia's H20, has gained traction, enabling more efficient real-time reasoning processes. Additionally, innovations in cooling systems and energy-efficient designs are being integrated into data centers to reduce operational costs and environmental impact. These technological advancements are helping to address some of the challenges faced by the industry while aligning with evolving AI requirements.

The Chinese government has maintained its focus on AI infrastructure as a strategic priority. In early 2025, it organized an AI industry symposium to address the importance of self-reliance in this sector. Major technology companies in China are aligning their investments with this objective. For example, Alibaba Group has announced plans to allocate significant resources to cloud computing and AI hardware over the next three years, while ByteDance is also planning substantial investments in GPUs and data centers. These efforts reflect the broader national strategy to strengthen AI capabilities.

Shifts in the AI data center market indicate a growing need for hardware optimized for inference tasks. Chips like Nvidia's H20, designed specifically for the Chinese market, are becoming more relevant as the industry focuses on real-time reasoning tasks. This evolution highlights the importance of adapting data center infrastructure to meet changing requirements, including the need for low-latency systems located near major technology hubs. Companies are also exploring ways to enhance efficiency and cost-effectiveness in AI operations.

Challenges such as underutilization and financial constraints persist, but the development of AI infrastructure remains a key focus. The competition with other global players, including initiatives in the United States to expand advanced data centers, continues to influence the direction of AI infrastructure development in China. The emphasis on aligning investments with evolving industry needs and adapting to technological advancements is shaping the future of AI data centers in the country.

China Artificial Intelligence (AI) Optimised Data Center Market Trends

Western China witnesses a surge in AI-driven data center deployments.

China's "Eastern Data, Western Computing" (EDWC) strategy, powered by advancements in artificial intelligence, has played a critical role in addressing the disparity between data generation in the eastern regions and computational resources in the west. By transferring data processing operations to western provinces such as Guizhou and Inner Mongolia, the initiative leverages the availability of vast land and renewable energy resources in these areas. This strategic approach not only maximizes resource efficiency but also reduces infrastructure pressure in the heavily populated eastern cities.

As of August 2024, the EDWC project has attracted substantial investments, with over 200 billion yuan (approximately USD 28 billion) directed toward the development of eight major data center hubs. These hubs collectively house around 1.95 million server racks, with nearly 63% currently operational. The focus on renewable energy sources, including hydroelectric and wind power, underscores China's commitment to sustainable growth in its digital infrastructure expansion.

Gui’an New Area in Guizhou province serves as a prime example of the EDWC strategy's success. Designated as an energy reform pilot zone, Gui’an has secured significant investments from power producers and technology companies. This integration of digital infrastructure with renewable energy initiatives has positioned Gui’an as a model for sustainable data center development.

The EDWC initiative also aims to drive economic growth in western regions by creating high-skilled job opportunities and fostering technological innovation. By decentralizing data processing capabilities, the strategy enhances national computing capacity while promoting balanced regional development.

Adoption of Domestic AI Chips in Hyperscale Data Centers Amid U.S. Export Restrictions

In response to U.S. export controls that restrict access to advanced AI chips, Chinese tech firms are rapidly advancing the development and deployment of homegrown alternatives. Huawei’s Ascend 910C processor has emerged as a frontrunner, positioning itself as a key player for AI tasks in China's expansive data centers.

Integrated into Huawei’s CloudMatrix 384 system, the Ascend 910C links 384 processors via optical interconnects, boosting performance. Reports suggest this setup outperforms Nvidia’s NVL72 by 67% in compute power and boasts over triple the memory capacity. Yet, the system's drawbacks include higher power consumption and a need for more operational staff, largely due to its less mature software support.

Despite these hurdles, Huawei's alliances with tech giants such as Baidu, ByteDance, and Tencent have paved the way for Ascend chips' integration into cloud services and data centers. These partnerships not only bolster the adoption of domestic AI processors but also play a pivotal role in cultivating a vibrant AI ecosystem in China.

Production of the Ascend 910C is in full swing, with mass shipments expected by early 2025. Produced by SMIC using the N+2 process, the chip's manufacturing grapples with challenges, notably a low yield rate of about 20%. This is largely due to hurdles in obtaining advanced lithography equipment.

China's pivot towards homegrown AI chips underscores its ambition for technological self-sufficiency in vital sectors. By championing domestic solutions, China seeks to cushion the blow from external constraints and fortify its AI infrastructure's resilience.

China Artificial Intelligence (AI) Optimised Data Center Industry Overview

China's AI data center market is witnessing significant growth, driven by the rising demand for advanced digital infrastructure to support artificial intelligence (AI), cloud computing, and other cutting-edge technologies. Leading players in this market include global firms such as Alibaba Cloud, GDS Holdings, and Chindata Group, alongside other prominent domestic companies like BDX Data Centers and VNET Group. These organizations are heavily investing in expanding their data center capacities and adopting innovative technologies to cater to the increasing requirements of AI-driven applications and cloud services. The market's expansion is further supported by China's strategic initiatives aimed at enhancing AI capabilities and fostering technological advancements within the country. These factors collectively position China as a key player in the global AI data center landscape, with strong growth potential in the coming years.

In February 2025, Alibaba Cloud launched its second data center in Thailand to meet the growing demand for cloud computing services, particularly for generative AI applications. This expansion aligns with the Thai government's initiatives to foster digital innovation and sustainable technology development. The new data center enhances Alibaba Cloud's local infrastructure, enabling businesses in sectors such as technology, media, fintech, and retail to leverage advanced cloud solutions tailored to their needs.

In April 2025, BDx Data Centers (BDx), one of Asia-Pacific’s fastest-growing data center operators, announced its certification as part of the NVIDIA DGX-Ready Data Center program. BDx’s 500MW CGK4 AI Campus in Indonesia is among the first in the country to achieve this certification, providing scalable and high-performance infrastructure for AI and advanced computing workloads. This milestone enables BDx to support NVIDIA accelerated computing for training and inferencing at the edge, empowering customers to develop full-stack AI solutions while meeting the demands of AI-driven innovation.

China Artificial Intelligence (AI) Optimised Data Center Market Leaders

China Artificial Intelligence (AI) Optimised Data Center Market News

• April 2025: China has launched the first-ever commercial underwater data center off the coast of Hainan Province. This facility, leveraging the ocean's natural cooling properties, significantly reduces energy consumption while housing over 400 high-performance servers capable of processing more than 7,000 AI queries per second. This development marks a groundbreaking step in sustainable AI infrastructure.
• March 2025: China's AI data center industry is facing significant challenges as many facilities remain underutilized. Up to 80% of newly built computing resources are idle, with operators struggling to attract clients for GPU rentals. Nvidia H100 server rental prices have dropped to 75,000 yuan per month, reflecting a sharp decline in demand. The shift in AI trends, driven by reasoning models like DeepSeek's R1, has altered infrastructure requirements, leaving many data centers ill-equipped to meet current needs. Some facilities are choosing to remain idle to avoid further financial losses, and there is speculation that the Chinese government may intervene to address the growing issues in the sector.