December 24, 2024

A single optical fiber of an optical cable.

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Singaporean asset manager Keppel and Vietnamese conglomerate Sovico Group are discussing plans for a new undersea fiber optic cable that would boost the region’s data center industry, people familiar with the matter said.

The Southeast Asian nation, a major hub for cables connecting Asia and Europe, is looking to expand its networks to meet growing demand for artificial intelligence services and data centers. Vietnam alone plans to build 10 new submarine cables by 2030.

Submarine cables are in the center The U.S.-China tech war comes against the backdrop of a race between the two powers to win contracts, particularly in Asia, to build and maintain the strategic infrastructure that carries most internet data, including sensitive information.

Five people directly involved or aware of the matter said that under one plan being discussed, a cable would be laid to directly connect Vietnam to Singapore.

It will cost $150 million, according to a source with direct knowledge of the negotiations.

Sovico favors the option, but talks with Keppel over the direct cable are still in flux and no agreement has been reached, two people familiar with the matter said.

Keppel would prefer a more ambitious cable TV plan involving a consortium of investors, they added.
Under the second plan, the connection to Vietnam developed by Sovico would be an offshoot of a longer cable, three people familiar with the matter said, with one of the people noting that the cable would run from Singapore to Japan and connect to countries along the route.

The sources declined to be named because the information is not public.

Sovico, a conglomerate with interests in aviation and banking, recently announced plans to develop a data center. It did not respond to a request for comment.

Keppel agreed in November to purchase AI-ready data center facilities in Japan. Singapore is a major hub for data centers and submarine cables, but the small island nation is nearly saturated with data usage capabilities.
A Keppel spokesman declined to answer Reuters’ questions about the two cable plans, saying: “We do not comment on market speculation.”

A senior Sovico executive raised the company’s cable plans with Keppel at an internal meeting late last month with Prime Minister Pham Minh Chinh and other companies involved in the digital economy, an attendee told Reuters.

Vietnam’s government offices and foreign ministry did not respond to requests for comment.

Competition between China and the United States

According to preliminary plans, it has not yet been decided who will build either cable, but two people familiar with the matter said Chinese contractors would not be involved in a possible direct connection between Vietnam and Singapore.

Two people with direct knowledge of the negotiations told Reuters that U.S. officials briefed Soveko on the alleged risks of choosing a Chinese cable contractor.

According to an exclusive report by Reuters in September, U.S. officials and advisers have organized multiple briefings with Vietnamese and Singaporean officials in recent months to dissuade them from using HMN Technologies as part of a global campaign to curb the rise of Chinese contractors.

According to public information, the two projects are not related to the possible investment in four new submarine cables previously announced by Vietnamese companies, two of which will be built by Japan’s NEC and the other by China’s HMN Tech to connect Vietnam with existing international cables. Connected.

The fourth was announced in April by Vietnam’s state-owned telecommunications company Viettel and Singapore’s Singtel, with initial plans to directly connect Vietnam to Singapore. No construction contracts have been announced.

With a population of nearly 100 million, Vietnam is a huge market for online platforms, but it is currently connected to global network infrastructure through only five undersea branches of international cables.
Despite power supply issues and strict data regulations, industry experts believe its plans to triple the number of cables could boost its chances of becoming an alternative regional data center hub

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