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Chunghwa Telecom eyes Asia expansion, targets cloud growth

Chunghwa unveiled a new $406 million data center in July. (Photo by Cheng Ting-fang)

TAIPEI -- Chunghwa Telecom, Taiwan's largest telecommunications operator by market share, is aspiring to enhance its regional presence after the opening of a new 13 billion New Taiwan dollar ($406 million) data center late July, a company executive told Nikkei Asian Review.

The statement by Ma Hong-chan, president of the data communications business group, comes as Chunghwa is seeking to drive revenue in the growing internet-related service market amid shrinking demand for its traditional landline business.

Chunghwa executive Ma Hong-chan says the company wants to become a key regional cloud service provider. (Photo provided by Chunghwa)

Chunghwa is the biggest Taiwanese internet service provider, controlling over 70% of the domestic market. Ma said with the company's existing infrastructure, it is natural to expand its data center business as it can offer customers the best internet connection in Taiwan.

"We are investing a gigantic sum on the new data center hoping that we can grow into a key data center service provider in the Asia Pacific region," Ma said in a recent interview. He added the facility, located in suburban Taipei, had world-class power and security management systems.

Ma said that Taiwan's financial services companies are a target group of customers for the new facility as the building is next to the Taiwan Stock Exchange's data center.

A data center houses computing, storage and networking systems, with the capability to handle massive amounts of data and provide cloud computing services to customers remotely.

Data centers are essential in the development of next-generation technologies including artificial intelligence, robotics and connected devices.

Leading global tech companies such as Google, Amazon and Microsoft all operate their own data centers, and also lease cloud computing services from these facilities to other businesses. Startups and small and medium-sized companies often rely on external service providers to meet their increasingly complex computing demands.

During the April to June period, Chunghwa's profit dropped 0.7% from the year-ago period to NT$11.06 billion on revenue of NT$56.2 billion, also down 1.3% on the year. Most of the revenue decline came from a drop in both mobile and landline phone calls, while its internet-related business was a bright spot gaining 5.5.%.

Research company IDC also sees the cloud market as a growth area, forecasting cloud IT infrastructure spending to grow at a compound annual growth rate of 15.1% and reach $53.1 billion by 2019.

With servers becoming a potentially lucrative business as data centers spring up around the world, chip designers including ARM and AMD are eager to tap into the market which is now dominated by Intel. The American giant supplies over 80% of the chips used in the data center servers.

"Overall, Intel offers better computing efficiency on the same power consumption...so that is why Intel-based servers are still the most common ones deployed in data centers," Ma said.

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