Latin America Data Center Market

Latin America Data Center Market Size

The Latin America data center market was valued at USD 1.62 billion in 2024 and is anticipated to reach USD 1.76 billion in 2025, from USD 3.49 billion by 2033, growing at a CAGR of 8.91% during the forecast period from 2025 to 2033.

The Latin America data center market refers to the collective infrastructure, services, and technologies involved in housing, managing, and maintaining servers, storage systems, and networking equipment across the region. It encompasses colocation facilities, hyperscale data centers, enterprise data centers, and edge computing hubs that support digital transformation, cloud adoption, and internet-based services. Also, the region is witnessing a surge in demand for digital infrastructure due to rapid urbanization, increasing mobile penetration, and government-led digitization initiatives. In addition, rising investments from global technology firms such as Google and Microsoft are accelerating the deployment of cloud regions and data center facilities in strategic locations across the continent.

MARKET DRIVERS

Rapid Growth in Digital Transformation Across Key Sectors

Digital transformation is one of the most influential drivers shaping the Latin American data center market. Across industries 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. This shift is fueling demand for scalable and secure data hosting solutions, particularly in countries like Brazil and Mexico, where corporate IT budgets are on the rise. Moreover, the financial sector has been at the forefront of this transformation. As per the Central Bank of Brazil, digital banking transactions increased by more than 30% year-over-year in 2023, necessitating robust backend infrastructure to manage data traffic and ensure compliance with local regulations. Similarly, in Mexico, the National Banking and Securities Commission reported that over 65% of financial transactions were conducted digitally in 2023, up from 45% in 2020. This widespread digital adoption is compelling organizations to either upgrade existing data centers or partner with third-party providers capable of delivering high-performance infrastructure.

Expansion of Cloud Infrastructure and Hyperscale Investments

The proliferation of cloud infrastructure and increasing hyperscale investments have become pivotal in driving the Latin American data center market. Major global cloud service providers such as Amazon Web Services (AWS), Microsoft Azure, and Google Cloud have ramped up their presence in the region, recognizing the growing demand for low-latency, high-availability digital services. AWS launched its second infrastructure region in São Paulo in 2023, while Google announced a USD 1 billion investment in cloud infrastructure across Brazil, including new data centers and fiber optic expansions. This represents a notable increase from previous years, indicating a structural shift toward large-scale, centralized computing resources. These developments are not only expanding the region's data processing capabilities but also encouraging local enterprises to migrate workloads to the cloud, further boosting demand for supporting infrastructure.

MARKET RESTRAINTS

Regulatory Complexity and Data Localization Policies

One of the primary restraints affecting the Latin American data center 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. For instance, Brazil introduced the General Data Protection Law (LGPD) in 2020, which mandates strict compliance measures similar to the European Union’s GDPR. 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 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. According to the World Bank, approximately 20% of Latin American businesses experience frequent power outages, with some countries like Venezuela and Nicaragua facing disruptions exceeding 40 hours per month. 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 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 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. In 2023, the Inter-American Development Bank reported that over USD 3 billion was allocated to green infrastructure projects in Latin America, including sustainable data centers powered by renewable energy sources. Chile stands out as a leader in this movement, benefiting from abundant solar and wind energy potential. According to the Chilean Energy Ministry, the country achieved 57% renewable energy generation in 2023, with several data centers now operating entirely on clean power. 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.

MARKET CHALLENGES

Cybersecurity Threats and Lack of Skilled Workforce

Cybersecurity threats pose a significant challenge to the Latin American data center market, as the region experiences a sharp rise in cyberattacks targeting critical digital infrastructure. According to Kaspersky Lab, Latin America saw a 37% increase in ransomware attacks in 2023 compared to the previous year, with Brazil alone accounting for over 40% of incidents. 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 market faces persistent challenges stemming from inadequate infrastructure and uneven connectivity, particularly in rural and remote areas. According to the International Telecommunication Union (ITU), as of 2023, only 45% of households in rural Latin America had access to fixed broadband connections, compared to over 75% in urban zones. 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.

REPORT COVERAGE

SEGMENTAL ANALYSIS

By Data Center Size Insights

The Mega Data Center segment had the largest share of the Latin America data center market by accounting for 38.5% in 2024, which is driven primarily by increasing investments from global hyperscalers and cloud service providers. These facilities with high power density capabilities are essential for supporting large-scale computing workloads, especially in sectors like finance, e-commerce, and telecommunications. One key driver is the expansion of hyperscale infrastructure across the region. Companies such as Google and Microsoft have announced multi-billion-dollar investments in new mega facilities in São Paulo and Querétaro, respectively, aiming to meet rising regional demand for low-latency cloud services. Additionally, the surge in digital transformation initiatives has amplified the need for scalable infrastructure.

The Medium Data Center segment is projected to grow at the fastest rate, recording a CAGR of 12.7%. This development trajectory is attributed to the rising adoption of hybrid IT models among mid-sized enterprises that require localized yet scalable computing resources without the complexities associated with mega facilities. A primary growth catalyst is the increased deployment of colocation services tailored to medium-sized businesses. Moreover, regulatory developments favoring data sovereignty are encouraging enterprises to deploy regional data centers rather than relying solely on public cloud providers. In Argentina and Chile, local compliance mandates have led to a rise in medium-scale deployments.

By Tier Insights

The Tier 3 Data Center segment commanded the Latin America data center market by capturing 42.6% of the total market value in 2024. Tier 3 facilities offer concurrent maintainability, allowing maintenance activities without disrupting operations, making them ideal for mission-critical applications in industries such as banking, healthcare, and government. 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 highest CAGR of 14.2%. 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 Absorption Insights

The Utilized Data Center Space segment accounted for the majority of the Latin America data center market, i.e,. 67% of total capacity utilization in 2024. This segment refers to the portion of built-out data center space actively used by tenants or operators, reflecting strong demand from enterprises, cloud providers, and colocation customers. One major driver behind the dominance of the Utilized segment is the increasing reliance on cloud-based services and digital infrastructure. This uptick in digital activity has resulted in near-full occupancy rates in major metropolitan hubs such as São Paulo and Mexico City. Additionally, hyperscale operators are prioritizing rapid deployment strategies to meet customer demand, leading to faster absorption of available space. Google Cloud, for example, achieved 95% utilization within 12 months of commissioning its second data center in Brazil, as per internal operational metrics released in early 2024.

The Non-Utilized Data Center Space segment is expected to expand at the highest growth rate, registering a CAGR of 11.5% from 2025 to 2033. This segment includes pre-leased or under-construction space that is not yet operational but is earmarked for future deployment, reflecting confidence in long-term demand. One significant growth driver is the surge in speculative development by colocation providers anticipating future demand. In addition, hyperscale companies are securing large blocks of non-utilized space to ensure scalability. Microsoft, for instance, reserved over 200 MW of unutilized capacity in São Paulo and Bogotá in 2023, as part of its regional expansion strategy.

COUNTRY-LEVEL ANALYSIS

Brazil maintained the largest share of the Latin American data center market by accounting for 34.5% in 2024. Positioned as the region’s technological and economic powerhouse, Brazil benefits from a mature telecom ecosystem, high internet penetration, and an expanding digital economy. The country’s central location makes it a strategic hub for international data routing, particularly for transatlantic and intercontinental fiber optic cables. 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 positioned as a gateway between North and Latin America. It offers 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. Microsoft launched its first dedicated Azure region in Querétaro in 2023, while AWS continues to expand its footprint. The Mexican government has also introduced incentives for green data centers, aligning with global sustainability goals.

Argentina commanded a smaller portion of the Latin American data center market in 2024. Despite economic volatility, 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. Additionally, 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.

Chile is known for its political stability, transparent regulatory framework, and abundant renewable energy. It 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) includes countries such as Colombia, Peru, Ecuador, and Costa Rica, each experiencing varying degrees of digital infrastructure development. Colombia is emerging as a focal point within RoLA, supported by government-backed initiatives. 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 market in the coming years.

KEY MARKET PLAYERS

Ascenty (Digital Realty Trust Inc.), EdgeUno Inc., Equinix Inc., GTD Grupo Teleductos SA, HostDime Global Corp., Lumen Technologies Inc., NABIAX, ODATA (Patria Investments Ltd), Quantico Data Center, Scala Data Centers, SONDA SA, Terremark (Verizon). Are the market players that are dominating the LatinAmericana data center market?t.

Top Players In The Market

Equinix is a dominant force in the Latin American data center 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 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.

Ascent, 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 landscape.

Top Strategies Used by Key Market Participants

Key players in the Latin America data center market are leveraging strategic acquisitions and partnerships to enhance their service portfolios and expand regional footprints. Many 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.

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, the expansion of hyperscale-ready facilities and edge computing capabilities is gaining traction. 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 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 market is segmented and sub-segmented into the following categories.

By Data Center Size

• Large
• Massive
• Medium
• Mega
• Small

By Tier Type

• Tier 1 and 2
• Tier 3
• Tier 4

By Absorption

• Non-Utilized
• Utilized
• By Colocation Type
• Hyperscale
• Retail
• Wholesale
• By End User
• BFSI
• Cloud
• E-Commerce
• Government
• Manufacturing
• Media & Entertainment
• Telecom
• Other End User

By Country

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