Nowhere else on Earth has been physically reshaped by artificial intelligence as quickly as the Malaysian state of Johor. Three years ago, this region next to Singapore was a tech-industry backwater. Palm-oil plantations dotted the wetlands. Now rising next to those tropical trees 100 miles from the equator are cavernous rectangular buildings that, all together, make up one of the world’s biggest AI construction projects…

TikTok’s Chinese parent company, ByteDance, is spending $350 million on data centers in Johor. Microsoft just bought a 123-acre plot not far away for $95 million. Asset manager Blackstone recently paid $16 billion to buy AirTrunk, a data-center operator with Asia-wide locations including a Johor facility spanning an area the size of 19 football fields. Oracle last week announced a $6.5 billion investment in Malaysia’s data-center sector, though it didn’t specify where. In all, investments in data centers in Johor, which can be used for both AI and more conventional cloud computing, will reach $3.8 billion this year, estimates regional bank Maybank.

To understand how one of the first boomtowns of the AI era sprouted at the southern tip of the Malay Peninsula, consider the infrastructure behind AI. Tech giants want to train chatbots, driverless cars and other AI technology as quickly as possible. They do so in data centers with thousands of computer chips, which require a lot of power, as well as water for cooling…Northern Virginia became the world’s biggest data-center market because of available power, water and land. But supply is running low. Tech companies can’t build data centers fast enough in the U.S. alone. Enter Johor. It has plentiful land and power—largely from coal—and enough water. Malaysia enjoys generally friendly relations with the U.S. and China, reducing political risk for companies from the rival nations. The other important factor: location. Across the border is Singapore, which has one of the world’s densest intersections of undersea internet cables. Those are modern-age highways, enabling tech companies to sling mountains of data around the world.

Excerpt from Stu Woo, One of the Biggest AI Boomtowns Is Rising in a Tech-Industry Backwater, WSJ, Oct.  8, 2024