Why Google, Amazon and Microsoft Need Chinese Data Center Suppliers

U.S. data center operators’ reliance on Chinese manufacturers for batteries, cooling systems, optical transceivers and other equipment has come under scrutiny over national security concerns.

But Chinese equipment makers have an edge over their American counterparts, which have been criticised for long lead times amid supply chain shortages. So despite rising hostility from the Trump administration and a bipartisan group of U.S. senators to the Chinese suppliers, American data center builders like Amazon, Google, Microsoft and Oracle can’t avoid them.

Nowhere was this symbiotic relationship clearer this past week than at Singapore’s Data Centre World Asia, one of the largest AI infrastructure conferences in the region. Chinese component manufacturers showed up in full force, showcasing everything from liquid cooling systems and power generation units to testing equipment known as load banks and smart energy solutions. Several attendees I spoke to remarked that they had never seen so many Chinese companies exhibiting alongside the usual American and European brands.

Data centers are all the rage in Asia, broadly welcomed by countries in the region—unlike in the U.S., where many communities have been resisting such projects. To support rising demand from Asia, Amazon, Google, Microsoft and Oracle in the past couple of years committed to a combined investment of more than $160 billion to build AI data centers in the region, according to McKinsey.

In sourcing advanced technology to support the build-out, Google’s Taiwan team, for example, was reportedly in talks with China’s Envicool and other Chinese firms earlier this year to buy liquid cooling systems, an increasingly critical feature for new AI facilities.

Chinese products are popular for two main reasons: pricing and track record. “If we do a tender process and compare a Chinese company with an existing player, China always wins on cost,” said one data center executive from Indonesia. He noted a growing trend in which the Chinese customers of data centers in the region recommend and push to favor China-based suppliers in procurement, reflecting a longstanding practice encouraged by Beijing as companies expand internationally.

Another executive, responsible for sourcing vendors for Malaysian data centers, pointed out the relatively high quality of some Chinese suppliers thanks to their extensive experience in China’s mature data center industry. Modular data center products, for instance, where construction relies on putting together prefabricated containers that can be easily moved to the final site, were on full display at the exhibition. The technology, which could bring construction timelines down to a matter of months, has been used in China for years but has only recently been adopted at scale in the U.S. amid the AI infrastructure boom. (Elon Musk has used modular construction for his SpaceXAI facilities, my colleague Grace reported last week.)

The executive’s only gripe was that many suppliers have yet to set up after-sales support outside China, which is critical as most operators need such support to keep data centers online without interruption.

Chinese companies face difficulties openly marketing their products in the U.S., but not in Asia, where data center executives are quicker to discuss their use of Chinese suppliers without fear of a backlash. I saw several small Chinese companies exhibiting for the first time at the conference, and some bigger ones too, including Midea Group, which makes electrical appliances, and Jiangsu Hongxin Intelligent Manufacturing Co., a liquid cooling manufacturer.

Still, many exhibitors and attendees talked to me about the impact of geopolitical tensions on their procurement and business expansion decisions. They have had to navigate it by rebranding themselves or setting up local companies to court U.S. customers. NetonX, a maker of liquid-cooling couplings in the eastern Chinese city of Suzhou, is one of the companies considering setting up entities in the U.S. and Singapore to make it easier to sell directly to American customers. The company derives 30% of its revenue from international sales, but it does so through local distributors, which makes it difficult to cultivate client relationships, Chief Technology Officer Frank Gao said.

Modular data center builder EPG, which was founded in China in 2004 and has served customers including Alibaba and Tencent, has rebranded itself as a Singapore company and raised $100 million from international investors this year. EPG’s sales representative told me that the company established manufacturing in Johor, Malaysia, to serve American customers that couldn’t accept products coming out of its Shanghai plant.

Data center operators that want to remain neutral are also having to think about how they source sensitive components that sit closer to the servers—even those that might not seem like obvious security risks but could be used to extract proprietary operational information.

Uninterruptible power supply technology, for example, “is especially sensitive because it’s able to track the power consumption trends of the data halls quite intimately,” said Christopher Han, managing director at Singapore-based Seraya Partners, an infrastructure investment fund that owns data center operator Empyrion Digital. Similarly, a type of cooling unit known as a computer room air handler can provide trending data, he said, meaning “anyone can more or less guess the type of workloads the data center is hosting.”

Interest in Asia’s data center industry has grown so much that the organizers of the conference, part of Tech Week Singapore, had to more than double its space so that 38,000 people could attend. Andy Kiwanuka, Asia Pacific managing director for the organizer, CloserStill Media, said suppliers grew from 346 across 40 countries last year, to 580 across 70 countries this year. And Chinese companies’ share of the exhibitor pool at Tech Week Singapore went from 5% in 2023 to 30% this year

Claudia Chong is a reporter covering AI and semiconductors in Asia. She is based in Singapore and can be reached at [email protected].