DeepSeek initially raised questions about the durability of Malaysia’s data centre boom. However, these concerns are now giving way to excitement as the situation becomes clearer, according to analysis released today by Juwai IQI Co-Founder and Group CEO Kashif Ansari.

Higher AI Usage to Drive Data Centre Demand
Mr. Ansari stated:
“DeepSeek shocked the world with a large language model that seems comparable to those offered by competitors like OpenAI—at a fraction of the cost.
Cheaper AI models like DeepSeek’s will most likely drive demand for data centres in Malaysia even higher. That’s because affordable AI enables widespread use of AI-powered tools that have previously been too expensive to adopt broadly. A survey in November found that financial concerns were the main obstacle preventing businesses from adopting AI. [1]
Large language models need to become inexpensive before AI can be widely used. DeepSeek appears to have made massive progress in this area, offering token prices just one-fifteenth that of established competitor Anthropic. [2]
Now that large language models are cheap enough for widespread use, we will likely see skyrocketing adoption of AI-related tools. When AI becomes more affordable, people will rely on it for more tasks, driving unprecedented demand for data centres, including in Malaysia.
Some prominent analysts support this conclusion. Morgan Stanley calculates that demand for power in Asia-Pacific (excluding China) will climb by 4% if tech companies accelerate their investments due to AI’s reduced energy intensity. [3]
For the real estate industry in Malaysia, this means that demand for land suitable for data centres will remain strong and could potentially grow.”
Malaysia is Well-Positioned with AI-Ready Data Centres
Not all data centres are designed to meet the growing demands of AI. However, Malaysia is well-positioned for a future where AI dominates data centre development.
“Data centres originally built for enterprise IT, cloud computing, and general-purpose workloads often lack the power, cooling, and networking infrastructure needed for AI,” Mr. Ansari noted. “Malaysia, however, has billions of dollars in planned AI-ready data centres. Government initiatives and major investments from companies like Nvidia, ByteDance, Google, AWS, and Microsoft ensure this.” [4]
Malaysia’s data centre pipeline includes 1.2 GW of planned capacity, marking a 600% growth over the next five years. Approximately 55% of new projects are planned for the Kuala Lumpur area, while the remaining 45% will be in Johor. [5]
Blackstone, one of the world’s largest financial investors in AI infrastructure, estimates that $2 trillion will be spent on data centres globally over the next five years. Malaysia is well-positioned to capture a significant share of this growth, with Johor being the fastest-growing market in Southeast Asia. [6][7]
“Data centre builders are tailoring projects for AI applications. For example, YTL Power’s green data centre park in Johor will incorporate advanced direct-to-chip liquid cooling, enabling the high power densities required for AI processing.” [8]
Malaysia Retains Its Competitive Advantages
Regardless of whether DeepSeek permanently reshapes the AI industry, Malaysia’s data centre demand is set to grow. The country retains all the advantages necessary to attract new facilities.
“Malaysia’s key advantages include relatively low-cost land and energy, a skilled workforce, strong digital infrastructure, government incentives, and connectivity to major markets such as Singapore, ASEAN, and China.
Energy costs are a significant factor. Malaysia’s industrial power tariffs are approximately $0.10 per kilowatt-hour (kWh), significantly lower than Singapore’s rates of about $0.27 per kWh.” [9]
Malaysia: A Winner in the AI Revolution
As AI becomes more accessible and affordable, Malaysia stands to benefit in multiple ways.
“Until recently, many believed Malaysia would need billions of dollars to develop its own language model. However, DeepSeek claims to have achieved this for under $10 million.
At that price, Malaysia could afford to develop its own language models, integrating AI into research, education, and the broader economy. Malaysian consumers will also benefit as AI becomes an integral part of everyday services.
Just as mobile phones only became universal once they became affordable, AI-powered tools and services must be cost-effective to achieve widespread adoption. After the DeepSeek breakthrough, it’s now possible to envision AI driving services that impact people’s daily lives as significantly as electricity once did.”
References
- Call Centre Helper
- The Economist
- AFR
- CNBC
- Data from Juwai IQI’s prior data centre report
- NY Times
- DC Byte
- TechNode
- EdgeConnex