The Rising Importance of Data Centers in the Digital Economy
Data centers are crucial infrastructures supporting the digital transformation, underpinning both economies and daily life. They are also increasingly viewed as geopolitical tools.
At Futurecom, a prominent telecommunications forum in Latin America, data centers were the talk of the town. The industry is projected to generate a global market worth nearly $585 billion by 2032, according to early estimates by Newmark.
Brazil’s Strategic Advantage
While the market size is significant, Brazil’s potential to become a major global player in data centers due to its strategic positioning was the real draw. This comes at a time when U.S. tech companies defy Brasilia’s laws, Europe grapples with stricter AI regulations, and Trump bans Huawei from the U.S. telecom market.
Moreover, with growing demands for infrastructure from generative AI and the Internet of Things, Brazil sees a golden business opportunity.
Data Centers: The Backbone of the Digital Economy
These infrastructures form the bedrock of the digital economy, housing sensitive information for individuals, businesses, and governments. While consumers may think data centers only store and process information for convenience, they also serve as diplomatic tools.
Brazil’s soft power index, according to Brand Finance, ranks it 31st globally for influence in this field by 2025. Mexico trails at 42nd.
Global Distribution of Data Centers
In 2024, the U.S. held 40% of global data centers, followed by China with 30%. Latin America remains relatively discreet in this sector.
Brazil, at its scale, is already a significant player in data centers. Cities like Campinas, Brasilia, Porto Alegre, and Fortaleza are its crown jewels. JLL Consulting estimates Brazil will attract $1.5 billion in data center investments by 2026 and around $2 billion by 2027.
TikTok’s Chinese parent company values up to $10 billion in data center investments in Brazil. For context, Mexico aims to attract around $9.2 billion in the same industry over five years.
Brazil’s ReData Initiative
ReData is Brazil’s bet to gain ground in data centers. It’s a special regime designed to stimulate the data center industry through tax benefits, regulation, research, technological advancements, and clean energy promotion to lure investment, build human capital, and boost the digital economy.
“Brazil needs data governance, and ReData encourages the creation of data centers for sensitive government information, ensuring data stays within Brazil,” said Bruno Gonçalves, coordinator of data infrastructure at the Brazilian Geography and Statistics Institute.
“Today, Brazil is by far the largest market in Latin America, with over 200 million people. Without ReData, Brazil would still be Latin America’s data center hub, but with ReData, Brazil could now become a global center,” said Equinix Brazil President Victor Arnaud at Futurecom.
Brazil’s Data Center Landscape
The Brazilian Data Centers Association reports 162 operational data centers across the country. The southeast hosts the majority, with 110 units, followed by the south with 27, northeast with 15, and west and north with a handful each. Brazil’s potential and influence in this field are set to grow.
Investor Interest and International Clients
Some investors are willing to put $1 billion into a single data center, and international clients have already reached out to Brazil’s government, according to Ascenty’s Income and Strategy Director Marcos Siqueira.
ReData: A Positive Initiative
Industry leaders at Futurecom agreed that Brazil is well-positioned to attract more data center investments. Being a Southern Hemisphere leader, driving the American and South American economies, with cultural ties extending to Africa and favorable telecom conditions, Brazil can overcome regulatory, tax, connectivity, and energy hurdles.
TeleGeography’s Perspective
Peter Wood, a senior research analyst at TeleGeography, emphasized Brazil’s central role in Latin American connectivity advancements, especially regarding data centers. Sao Paulo, Rio de Janeiro, and Fortaleza have become essential hubs for connecting to the Brazilian market and shaping Brazil’s regional and global leadership during AI technology transitions.
