Latin America Data Center Construction Market

Latin America Data Center Construction Market Size

The Latin America data center construction market was valued at USD 18.99 billion in 2024 and is anticipated to reach USD 21.31 billion in 2025 from USD 53.63 billion by 2033, growing at a CAGR of 12.23% during the forecast period from 2025 to 2033.

The Latin America data center construction market incorporates the development and expansion of physical infrastructure dedicated to housing, managing, and maintaining IT equipment such as servers, storage systems, networking hardware, and cloud computing resources. This includes the building of hyperscale data centers, enterprise facilities, colocation centers, and edge computing hubs that support digital transformation across industries.

According to the International Telecommunication Union (ITU), internet usage in Brazil reached approximately 78% in 2023, significantly higher than the regional average. In addition, global technology firms such as Google, Microsoft, and Amazon Web Services have announced major investments in new data center projects across the region.

MARKET DRIVERS

Expansion of Cloud Infrastructure and Hyperscale Investments

One of the most influential drivers shaping the Latin American data center construction market is the rapid proliferation of cloud infrastructure and hyperscale investments. Major global cloud service providers, including Amazon Web Services (AWS), Microsoft Azure, and Google Cloud, are expanding their regional footprints to meet growing demand for low-latency, scalable computing resources. This trend is particularly evident in Brazil, where AWS launched its second infrastructure region in São Paulo in 2023, while Google announced a USD 1 billion investment in cloud infrastructure, including new data centers and fiber optic expansions. These developments are not only enhancing the region’s digital capabilities but also encouraging local enterprises to migrate workloads to the cloud, further boosting demand for supporting infrastructure.

Digital Transformation Across Key Sectors

Digital transformation is one of the most significant catalysts driving the Latin American data center construction market. Across sectors such as banking, healthcare, retail, and manufacturing, companies are adopting cloud computing, artificial intelligence, and big data analytics to enhance operational efficiency and customer engagement. The financial sector has been at the forefront of this shift. This widespread adoption of digital technologies is compelling organizations to either upgrade existing data centers or partner with third-party providers capable of delivering high-performance infrastructure. The result is a significant uptick in demand for colocation services and hybrid cloud environments across the region, reinforcing the expansion of the Latin American data center construction market.

MARKET RESTRAINTS

Regulatory Complexity and Data Localization Policies

A primary restraint affecting the Latin America data center construction market is the complex and often inconsistent regulatory landscape across different countries. While some nations have adopted progressive policies to attract foreign investment in digital infrastructure, others impose stringent data localization laws that require companies to store and process user data within national borders. Although designed to protect consumer privacy, these regulations can increase operational costs and complexity for international cloud providers and data center operators. In Argentina, the Personal Data Protection Law (Law 25.326) imposes rigorous conditions on cross-border data transfers, limiting the flexibility of multinational corporations in managing their global data architecture. Moreover, unclear enforcement mechanisms and evolving legal interpretations create uncertainty for investors assessing long-term viability in the region.

Energy Supply Constraints and High Operational Costs

Energy supply constraints represent a significant challenge for the Latin American data center construction market, given the energy-intensive nature of data centers. Many countries in the region face intermittent power availability, aging grid infrastructure, and limited access to renewable energy sources, all of which impact the reliability and cost-efficiency of data center operations. In particular, Peru and Ecuador have struggled with seasonal hydroelectric shortages, leading to periodic blackouts that affect industrial operations, including data centers. These elevated energy expenses directly influence the total cost of ownership for data centers, making it challenging to maintain competitive pricing models. Additionally, the lack of consistent green energy incentives further complicates efforts to reduce carbon footprints and meet sustainability goals.

MARKET OPPORTUNITY

Surge in Edge Computing Deployments Across Smart Cities and Industrial Applications

Edge computing is emerging as a transformative opportunity for the Latin American data center construction market, driven by the proliferation of smart cities, industrial automation, and real-time data processing needs. With urbanization accelerating across the region, governments and private enterprises are investing heavily in intelligent infrastructure to improve public services, transportation, and energy management. In Brazil, the Ministry of Science, Technology, and Innovation launched a national initiative in 2023 to integrate IoT-enabled sensors into urban infrastructure, requiring localized data processing capabilities to minimize latency. Similarly, in Mexico, automotive manufacturers are leveraging edge data centers to support real-time production monitoring and predictive maintenance. These applications demand proximity-based computing solutions, prompting the development of micro data centers and distributed infrastructure nodes. Furthermore, telecom operators in the region are rolling out 5G networks, which inherently rely on edge computing to deliver ultra-low latency connectivity.

Rising Demand for Green and Sustainable Data Centers

Sustainability is becoming a key focal point in the Latin American data center construction market, presenting substantial opportunities for operators who adopt eco-friendly practices. Governments and enterprises across the region are increasingly prioritizing environmental responsibility, aligning with global climate goals and investor expectations. Chile stands out as a leader in this movement, benefiting from abundant solar and wind energy potential. In response, major tech firms are establishing greenfield sites in Chilean coastal regions where natural cooling reduces energy consumption. Brazil is also advancing in this domain, with ANEEL (the Brazilian Electricity Regulatory Agency) introducing incentives for data centers using certified renewable energy. These developments indicate a paradigm shift towards environmentally conscious infrastructure, positioning green data centers as a major growth driver in the Latin American data center construction market.

MARKET CHALLENGES

Cybersecurity Threats and Lack of Skilled Workforce

Cybersecurity threats pose a significant challenge to the Latin American data center construction market, as the region experiences a sharp rise in cyberattacks targeting critical digital infrastructure. These threats undermine confidence in digital services and necessitate increased investments in security infrastructure, which many data center operators struggle to accommodate due to budgetary constraints. Compounding this issue is the shortage of skilled professionals capable of managing advanced cybersecurity frameworks. This gap limits the ability of data centers to implement robust defense mechanisms against sophisticated cyber intrusions. Moreover, the lack of standardized training programs and industry certifications hinders workforce development. Without adequate personnel to monitor, detect, and respond to cyber threats, data centers remain vulnerable, potentially stalling market growth and deterring foreign investment in the region’s digital infrastructure.

Infrastructure Gaps and Limited Connectivity in Rural Areas

Despite progress in urban centers, the Latin American data center construction market faces persistent challenges stemming from inadequate infrastructure and uneven connectivity, particularly in rural and remote areas. This disparity restricts the ability of enterprises to deploy reliable data services beyond metropolitan hubs and limits the effectiveness of nationwide digital initiatives. In countries like Bolivia and Honduras, roadblocks to infrastructure development include geographical barriers, insufficient funding, and bureaucratic delays. This underinvestment results in outdated telecommunications networks and unreliable power grids, both of which are essential for stable data center operations. Additionally, the absence of redundant fiber optic routes in certain regions increases vulnerability to service disruptions. For example, in parts of Paraguay and northern Argentina, a single fiber cut can disrupt connectivity for days.

REPORT COVERAGE

SEGMENTAL ANALYSIS

By Infrastructure Insights

The IT Infrastructure segment held the largest share of the Latin America data center construction market by accounting for 46% in 2024. This segment includes servers, storage systems, networking equipment, and software solutions that form the core of data center operations. One key driver behind its dominance is the rapid expansion of cloud computing and hyperscale investments across the region. The deployment of next-generation technologies like AI-driven analytics and software-defined networking has further increased demand for upgraded server and storage systems. Additionally, the digital transformation initiatives undertaken by enterprises are fueling demand for scalable IT infrastructure.

The Power & Cooling Infrastructure segment is projected to grow at the highest CAGR of 13.8%. This rapid expansion is driven by increasing energy demands from high-density computing environments and the need for efficient thermal management solutions. A primary growth catalyst is the adoption of high-performance computing and artificial intelligence workloads, which generate substantial heat and require advanced cooling mechanisms. Furthermore, growing emphasis on sustainability is pushing operators to adopt green energy solutions and smart cooling technologies. In Brazil, ANEEL introduced incentives for data centers using renewable energy sources, while Chile’s abundant solar and wind capacity supports the integration of low-carbon cooling systems. These developments are accelerating the expansion of the Power & Cooling Infrastructure segment within the Latin America data center construction market.

By Tier Insights

The Tier 3 Data Center segment commanded the Latin America data center construction market by capturing 41.8% of the total value in 2024. Tier 3 facilities offer concurrent maintainability, meaning they can undergo maintenance without disrupting operations, making them ideal for mission-critical applications in industries such as banking, healthcare, and government services. This dominance is largely fueled by the growing demand for highly available infrastructure capable of supporting uninterrupted digital services. Another contributing factor is the increasing number of colocation providers investing in Tier 3 certifications to attract enterprise clients. For instance, in Brazil, major players like Ascenty and SoftBank have expanded their Tier 3 portfolios to accommodate financial institutions requiring secure, compliant data handling.

The Tier 4 Data Center segment is anticipated to register the fastest CAGR of 14.5%. Tier 4 facilities offer fault-tolerant infrastructure, meaning they can sustain operations even during multiple simultaneous failures, making them indispensable for hyperscale cloud providers and large enterprises demanding ultra-high availability. One key growth driver is the aggressive expansion of global cloud providers in the region. Amazon Web Services (AWS), Microsoft Azure, and Google Cloud have all committed to deploying Tier 4-certified infrastructure in strategic hubs like São Paulo and Santiago. In addition, stringent regulatory requirements in sectors such as finance and healthcare are pushing organizations toward Tier 4 compliance.

By Verticals Insights

The IT & Telecom segment accounted for the biggest share of the Latin America data center construction market by contributing 39% in 2024. This segment encompasses telecom operators, internet service providers, and cloud service companies that require extensive digital infrastructure to support expanding connectivity and online services. A major factor driving this dominance is the rollout of 5G networks and fiber-optic expansions across the region. According to Ericsson’s 2023 Mobility Report, 5G subscriptions in Latin America are expected to reach 130 million by 2027, necessitating new data centers to handle increased traffic and reduce latency. Telecom operators in Brazil and Mexico are actively investing in edge data centers to support these deployments. Additionally, the proliferation of cloud-based services has intensified demand for scalable infrastructure.

BFSI Sector

The BFSI (Banking, Financial Services, and Insurance) segment is predicted to advance at the fastest CAGR of 12.9%. This quick expansion is attributed to the increasing digitization of financial services, regulatory mandates for data security, and the rise of fintech startups requiring robust hosting environments. One key growth enabler is the surge in digital banking adoption. Moreover, financial regulators across the region are enforcing stricter cybersecurity protocols, compelling banks and insurers to invest in secure, compliant data center infrastructure. As a result, the BFSI sector is emerging as a key growth engine for the Latin American data center construction market.

COUNTRY-LEVEL ANALYSIS

Brazil maintained the largest share of the Latin American data center construction market by contributing 34.9% in 2024. Positioned as the region’s technological and economic leader, Brazil benefits from a mature telecom ecosystem, high internet penetration, and an expanding digital economy. Digital transformation is a key growth enabler, with Brazilian enterprises investing heavily in cloud migration and AI-driven analytics. Additionally, government initiatives such as “Brasil Conectado” aim to improve nationwide broadband access, indirectly supporting data center expansion. Major tech firms, including Google and AWS, have also ramped up their presence.

Mexico is placed as a gateway between North and Latin America. Mexico benefits from favorable business conditions, proximity to the U.S., and a growing domestic demand for digital services. A key driver is the country’s expanding manufacturing and automotive sectors, which increasingly rely on Industry 4.0 technologies such as IoT and automation. Additionally, Mexico is witnessing heightened interest from hyperscale operators. The Mexican government has also introduced incentives for green data centers, aligning with global sustainability goals. These developments make Mexico a key player in the Latin American data center construction landscape.

Argentina remains a notable participant due to its well-established IT workforce, strong academic institutions, and growing fintech sector. A major growth factor is the increasing adoption of digital banking and online payment systems. Buenos Aires is becoming a regional fintech hub, attracting venture capital and prompting startups to invest in secure cloud and data center services. Regulatory reforms have also played a role in improving investor confidence. Argentina passed a revised data privacy law in 2023 that aligns more closely with international standards, facilitating cross-border data flows and encouraging multinational firms to establish local data hosting facilities.

Chile is known for its political stability, transparent regulatory framework, and abundant renewable energy, and has emerged as a preferred destination for hyperscale investments. One key driver is Chile’s leadership in sustainable data infrastructure.  Google and Microsoft have both established data centers powered entirely by solar and wind energy, leveraging Chile’s natural advantages. Additionally, Chile serves as a connectivity hub for South America due to its extensive subsea cable networks linking it to the U.S., Asia, and Europe.

Rest of Latin America (RoLA) is collectively experiencing varying degrees of digital infrastructure development. Colombia is emerging as a focal point within RoLA, supported by government-backed initiatives like “Colombia Digital 2030,” which aims to expand broadband access and promote digital entrepreneurship. Peru is also witnessing growth due to improved regulatory clarity and increased foreign direct investment. These developments highlight the potential of RoLA to become a stronger contributor to the Latin American data center construction market in the coming years.

KEY MARKET PLAYERS

ABB, Acer Inc., Ascenty, Cisco Systems, Inc., Dell Inc., Equinix, Inc., Fujitsu, Gensler, Hewlett Packard Enterprise Development LP, Hitachi, Ltd., HostDime Global Corp., Huawei Technologies Co., Ltd., IBM, INSPUR Co., Ltd., IPXON Networks, KIO, Lenovo, Oracle, Schneider Electric, Vertiv Group Corp are the market players that are dominating the Latin America data center construction market.

Top Players in the Market

Equinix is a dominant force in the Latin American data center construction market, offering a broad portfolio of colocation and interconnection services. The company has strategically expanded its presence across key markets such as São Paulo and Mexico City, enabling enterprises to deploy hybrid IT architectures with low-latency connectivity. Equinix’s focus on building global ecosystems through interconnected data centers supports multinational corporations seeking seamless access to regional and international digital infrastructure. Its commitment to sustainability and operational excellence further enhances its appeal among cloud providers, financial institutions, and large enterprises operating in Latin America.

Digital Realty plays a crucial role in shaping the Latin America data center construction landscape by providing scalable, enterprise-grade facilities tailored to hyperscalers, telecom operators, and managed service providers. With a strong emphasis on long-term partnerships and customized solutions, Digital Realty has established itself as a trusted provider in the region. Its data centers serve as critical nodes for global cloud connectivity, facilitating regional expansion for major technology firms. By aligning with evolving digital transformation needs, Digital Realty continues to strengthen its influence in Latin America’s expanding data ecosystem.

Ascenty, a leading Brazilian data center provider, holds significant importance in the Latin American market due to its extensive network of Tier III-certified facilities. As the largest independent data center operator in Brazil, Ascenty supports both domestic and international clients by delivering secure, high-performance infrastructure. The company's strategic investments in fiber networks and greenfield developments have reinforced its position as a key enabler of digital growth in the region. Ascenty’s localized expertise and commitment to innovation make it a vital contributor to Latin America’s evolving data center construction market.

Top Strategies Used by Key Market Participants

One of the most prevalent strategies among key players in the Latin American data center construction market is strategic acquisitions and partnerships. Companies are acquiring local data center operators or forming joint ventures to gain quicker access to established infrastructure and customer bases. These moves help reduce entry barriers and accelerate time-to-market for new capabilities, particularly in emerging markets where regulatory and logistical challenges can be complex.

Another prominent strategy is investment in sustainable and energy-efficient infrastructure. With growing environmental concerns and regulatory pressure, leading firms are prioritizing green certifications, renewable energy sourcing, and advanced cooling technologies. This not only reduces operational costs but also aligns with global corporate sustainability goals, making them more attractive to enterprise clients.

Lastly, there is a growing emphasis on expanding hyperscale-ready facilities and edge computing capabilities. Companies are deploying large-scale data centers in strategic locations while simultaneously investing in smaller, distributed edge sites to support latency-sensitive applications. This dual approach ensures comprehensive coverage and scalability across diverse industry demands in Latin America.

COMPETITION OVERVIEW

The Latin America data center construction market is marked by intense competition driven by rapid digital transformation, increasing cloud adoption, and growing demand for secure and scalable infrastructure. Established global players are actively expanding their presence in the region, often through strategic alliances, acquisitions, and localized investments. At the same time, regional operators are enhancing their offerings to compete with international giants by focusing on cost efficiency, compliance, and proximity to end-users. The competitive landscape is further shaped by the entry of cloud service providers who are either developing their infrastructure or partnering with colocation providers to meet rising demand. This dynamic environment fosters continuous innovation, particularly in sustainability, modular designs, and hybrid deployment models. As enterprises seek reliable data hosting solutions, the battle for market share intensifies, prompting vendors to differentiate through service quality, uptime guarantees, and customized infrastructure solutions tailored to specific industry needs.

RECENT HAPPENINGS IN THE MARKET

• In February 2024, Google announced the expansion of its cloud region in Santiago, Chile, reinforcing its commitment to strengthening digital infrastructure across Latin America. This move is aimed at improving latency and supporting local businesses adopting cloud-based services.
• In May 2024, Microsoft launched a new Azure availability zone in Bogotá, Colombia, enhancing redundancy and reliability for enterprise customers. The initiative was part of Microsoft’s broader strategy to expand its cloud footprint and support digital transformation in emerging markets.
• In July 2024, Equinix completed the acquisition of a leading Brazilian data center operator, significantly boosting its colocation capacity and interconnection capabilities in South America’s largest economy.
• In September 2024, Digital Realty partnered with a regional telecom provider to develop a new hyperscale campus in São Paulo, targeting increased demand from global enterprises seeking scalable and secure infrastructure in Latin America.
• In November 2024, Ascenty inaugurated a new Tier III-certified facility in Monterrey, Mexico, marking its first major expansion into the northern part of the country and strengthening its position as a leading data center provider in Latin America.

MARKET SEGMENTATION

This research report on the Latin America data center construction market is segmented and sub-segmented into the following categories.

By Infrastructure

• IT Infrastructure
  • Networking Equipment
  • Server
  • Storage
• PD and Cooling Infrastructure
  • • Power Distribution
    • Cooling
      • Air
        • Computer Room Air Conditioners (CRAC)
        • Computer Room Air Handlers (CRAH)
        • Rear Door Heat Exchangers    
        • Others
      • Liquid
        • Direct-to-Chip Liquid Cooling
        • Immersion Cooling
        • Rear Door Heat Exchanger with Liquid
    • Others
• Miscellaneous Infrastructure

By Tier Type

• Tier 1
• Tier 2
• Tier 3
• Tier 4

By Verticals

• IT & Telecom
• BFSI
• Government & Defense
• Healthcare
• Energy
• Others

By Country

• Brazil
• Chile
• Argentina
• Mexico
• Colombia
• Others