SoftBank’s US$50bil investment plan in Malaysia

— Reuters

SOFTBANK’s reported plans to invest up to US$50bil in artificial intelligence (AI), technology and data centres (DCs) across Peninsular Malaysia and Sarawak is certainly good news for Malaysia.

But it does pose one question – is the Japanese giant arriving rather late to Malaysia’s DC boom?

Since 2021, Malaysia has attracted billions in DC investments, with major players including Microsoft, Google, AWS and others already establishing substantial footprints, particularly in Johor and Greater Kuala Lumpur.

Indeed, the rush has been so intense that electricity supply is becoming a major constraint.

Concerns over grid capacity have prompted tighter approval conditions, with developers bearing grid-upgrade costs and the government now considering requiring operators to generate their own electricity.

Against this backdrop, Sarawak offers an intriguing alternative. Its abundant hydropower provides potentially cheaper, greener electricity, while its relatively undeveloped DC industry offers room for expansion.

But cheap electricity is not everything. Sarawak’s international connectivity remains less developed than Peninsular Malaysia’s, potentially limiting latency-sensitive applications.

Its smaller population and limited pool of specialised technology talent also present challenges to building a sophisticated AI ecosystem.

Nevertheless, AI model training, which is less sensitive to latency, could make Sarawak attractive for large-scale computing facilities.

Beyond DCs, SoftBank could explore industrial robotics, energy optimisation and AI-driven automation, leveraging Sarawak’s energy resources and industrial activities.

Peninsular Malaysia, meanwhile, offers better connectivity, deeper talent pools and proximity to established customers, although competition for electricity and suitable sites is intensifying.

Perhaps SoftBank’s strategy is to combine the peninsular’s established digital ecosystem with Sarawak’s energy advantage.

But the bigger question remains: Is SoftBank investing in Malaysia’s future AI capabilities, or merely securing another location for energy-hungry computing infrastructure in an increasingly crowded market?

Ultimately, Malaysia should judge the investment not by its headline dollar value, but by the technology, skills and lasting economic benefits it delivers.