Efforts aim to support surging demand for AI and data centre infrastructure

Singaporean investment firm Keppel and Vietnam’s Sovico Group are in advanced discussions to establish new undersea fibre-optic cables. The aim is to strengthen connectivity in the region and meet the rising demand for artificial intelligence (AI) services and data centres.

South-east Asia is a strategic hub connecting Asia to Europe via undersea cables, with nations seeking to expand their networks amid technological growth. Vietnam has set an ambitious goal of deploying 10 new submarine cables by 2030 to boost its digital economy and infrastructure.

One proposal under consideration involves laying a direct undersea cable between Vietnam and Singapore, estimated at a cost of US$150 million. Sources close to the negotiations indicate that Sovico Group favours this direct link, though discussions with Keppel have yet to produce a final agreement. Keppel has shown interest in a more extensive proposal involving a consortium of investors, with the undersea route potentially extending from Singapore to Japan and connecting other nations along its path.

Despite these discussions, geopolitical concerns remain central to the talks. US officials have expressed wariness regarding the use of Chinese contractors for these projects, particularly HMN Technologies. Reports suggest that the US has briefed both Vietnam and Singapore on potential risks associated with relying on Chinese companies for construction. As a result, there is growing pressure to exclude Chinese firms from the direct cable link between Vietnam and Singapore.

These plans differ from earlier efforts by Vietnamese firms to develop four additional undersea cables, with two linked to Japan’s NEC, one led by HMN Technologies, and one supported by Viettel and Singapore’s Singtel.

Vietnam’s efforts to expand its undersea cable network are seen as a strategic move to position itself as a data centre alternative in the Asia-Pacific region. Despite challenges like power supply issues and strict data governance, these efforts could enhance Vietnam’s role in the regional digital economy.

Keppel has recently invested in AI-ready data centre facilities in Japan, highlighting Singapore’s role as a key data centre hub. However, the island-state has limited capacity for additional data usage, further incentivising regional investments.

While no final agreements have been made, the outcome of these plans will have wide-reaching implications for the global undersea cable market and the US-China technology rivalry in Asia.