**Tencent and Alibaba Expand Cloud Infrastructure Across Asia**
Two major cloud providers have announced significant expansion plans in Asia, signaling continued growth in the region’s cloud computing market. Tencent Cloud has revealed plans to establish its first cloud region in Malaysia, while Alibaba Cloud has launched a third data centre in South Korea, adding further capacity to its existing infrastructure in the country. Both announcements were made on August 18th.
**Alibaba Adds Capacity in South Korea**
Alibaba’s latest South Korean facility is designed to augment its existing local presence. The company first entered the South Korean market in 2016 and opened its first data centre there in 2022. The new third facility was added less than a year after its second data centre, demonstrating a rapid pace of infrastructure development.
While specific physical locations have not been disclosed, the new facility will offer a comprehensive suite of services. These include compute, storage, networking, security, and database services, along with infrastructure and services specifically tailored for AI workloads.
Yongjoon Yoon, country manager of South Korea at Alibaba Cloud Intelligence, emphasized the strategic nature of this investment. “The third data centre is not merely an infrastructure expansion. It is an investment to help South Korean enterprises operate AI and cloud-based services more reliably,” Yoon stated.
This expansion is part of Alibaba’s broader, three-year commitment to invest at least RMB380 billion (approximately US$53 billion) in AI and cloud infrastructure. The company has also been actively expanding its footprint in other regions, including France, Japan, Malaysia, and Mexico. As part of this growth, Alibaba now operates 104 availability zones across 30 regions globally.
The company’s cloud business has also shown strong financial performance. Alibaba Cloud Intelligence revenue increased by 38% in its latest reported quarter, with AI products accounting for roughly 30% of its external cloud revenue, according to Reuters reports from May. Alibaba has indicated that its AI infrastructure spending will exceed the RMB380 billion program announced in 2025 as it continues to boost cloud computing capacity.
**Tencent Enters Malaysia’s Cloud Market**
Tencent’s planned Malaysian cloud region will similarly focus on advanced capabilities. The region will comprise up to three availability zones located in Johor. The local infrastructure is designed to support AI workloads, data-heavy applications, and the digital services used by Malaysian enterprises.
Bluefin Jiannan Zhao, vice president of Tencent Cloud and managing director of Tencent Cloud International for Asia Pacific, highlighted Malaysia’s strategic importance. “Malaysia remains a key market in Tencent Cloud’s growth strategy across Asia,” Zhao said, citing the country’s technology infrastructure and talent base as major assets.
At the time of the announcement, Tencent Cloud International noted that its infrastructure network already covered 66 availability zones across 23 regions. The new Malaysian region extends this footprint, which already includes infrastructure in Singapore, Indonesia, and Thailand.
Nucky Fang, general manager of Tencent Cloud International and Tencent Cloud Malaysia, reported that the company has identified increasing opportunities in Malaysia over the previous six months, particularly among banks, insurers, payment companies, and other large enterprises.
This expansion occurs against a backdrop of significant data centre development in Johor. According to Reuters, the state had attracted approximately US$35 billion in investment. JLL estimates that Johor’s planned data-centre capacity, including projects under construction and in the pipeline, could reach around 7GW, a roughly eightfold increase over current levels.
However, this growth has brought increased scrutiny regarding resource usage. Reuters reported in July that new projects in the region must explain how they will source their power, and Johor has imposed restrictions on particularly water-intensive data-centre designs. Malaysia’s investment authorities have also projected that electricity demand from data centres could exceed 5,000MW by 2035.
**A Competitive Landscape**
Tencent is entering a Malaysian cloud market that is already served by other hyperscalers. AWS opened a three-zone Malaysia region in August 2024, and Microsoft’s three-zone Malaysia West region became generally available in May 2025. Both AWS and Microsoft have cited local workload hosting and data residency as key reasons for establishing infrastructure in the country. Microsoft is also developing another cloud region in Johor Bahru.
**South Korea Adds AI Computing Capacity**
Alibaba’s new facility coincides with South Korea’s own push to expand its domestic AI computing infrastructure. The country’s Ministry of Science and ICT broke ground on the National AI Computing Center in Haenam on August 3rd, with plans for the facility to house more than 15,000 AI chips by 2028. The project is being developed through a public-private structure led by Samsung SDS, with participation from companies including Naver Cloud, Kakao, and KT.
Private-sector AI data-centre projects are also in the pipeline. In June, Reuters reported that SK, GS Group, and Naver initially planned about 550 trillion won of investment in projects representing a combined 8.4GW of AI data-centre capacity, with construction targeted to begin by the first half of 2028.
**Global Context: Spending Surges Driven by AI**
The announcements from Tencent and Alibaba come as global spending on cloud infrastructure services continues to rise. Synergy Research Group estimated that worldwide enterprise spending on cloud infrastructure services reached US$143.4 billion in the second quarter of 2026, an increase of more than US$43 billion from a year earlier. This 43% year-on-year increase was the highest growth rate recorded by Synergy in eight years, with generative AI identified as the main driver. Generative AI-specific cloud services grew by 165% year over year.
Malaysia was among the markets where cloud infrastructure spending grew at a rate above the worldwide average during that quarter, alongside India, Indonesia, Ireland, and Thailand.
While AWS, Microsoft, and Google still account for the majority of global cloud infrastructure spending—holding a combined market share of 67% in Q2 2026—Alibaba has noted that its share of Asia-Pacific IaaS revenue reached 22.5% in 2025, up from 20.8% a year earlier. This compares to a worldwide share of 7.7%.
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### FAQ
**Q1: Why are Tencent and Alibaba expanding their cloud infrastructure in Asia?**
A1: Both companies are investing heavily to capture growth in the Asian cloud computing market. The expansions are driven by increasing demand for cloud and AI services, supported by massive investments from hyperscalers and local governments. These moves also help them compete with established providers like AWS, Microsoft, and Google.
**Q2: What is the timeline for Tencent’s Malaysia cloud region?**
A2: While Tencent Cloud announced plans for a Malaysian region on August 18th, specific details regarding the launch timeline and operational dates for the up to three availability zones in Johor were not provided in the announcement.
**Q3: What makes Alibaba’s new South Korean data centre significant?**
A3: The new facility is significant as it represents Alibaba’s third data centre in South Korea, built in less than a year after its second. It is part of a major infrastructure push that includes a national AI computing center being developed by the South Korean government, positioning the country as a key hub for AI development.
**Q4: How is AI driving cloud infrastructure growth?**
A4: AI is the primary catalyst for the surge in cloud infrastructure spending. According to Synergy Research, generative AI-specific cloud services grew by 165% year over year, making it the main driver of the 43% increase in total cloud infrastructure spending in Q2 2026.
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### Conclusion
The announcements from Tencent and Alibaba underscore a significant acceleration in cloud infrastructure development across Asia. As global spending on cloud services, particularly for AI, reaches unprecedented levels, major providers are racing to expand their regional footprints. Malaysia and South Korea have emerged as key strategic locations in this expansion, attracting substantial investments from the world’s leading cloud providers. This regional growth is a direct response to the booming demand for scalable, reliable, and localized cloud and AI services.
