Apple’s next huge data center will be in Hong Kong, groundbreaking Q1 2013

Map of Hong Kong post handover

We’ve received word that Apple is building another enormous data center—this time in Hong Kong SAR, China.

Apple recently finalized a location in the New Territories region of Hong Kong near the Shenzhen China border for the data center. We spoke to a bidding contractor employee who, on the condition of anonymity, told us the planned data center’s scale is unprecedented for his business: “There is simply nothing to compare it to and therefore it is hard to make estimates on size based on the materials required.” We were told that construction is to begin in Q1 2013, and it will likely take over a year for operations to start in the data center. The aim is to have it operational by 2015, which is the same time that Apple’s Spaceship Campus 2 is scheduled to go online.

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Apple is currently reviewing bids from various local and international companies for the construction of the data center.

Google and other companies typically select Hong Kong for their Chinese data centers because of the Special Administrative Region‘s “One country, two systems” autonomous legal structure which seems to keep the Mainland Chinese Government’s hands off the data physically housed on its soil.

Google says it chose Hong Kong as a Data Center location for the following reasons:

Hong Kong offers an ideal combination of reliable energy infrastructure, a skilled workforce and a location right in the center of Asia, which has made it a trading powerhouse and a great place to provide services to our users around the region and globe. As with all of our facilities around the world, we chose Hong Kong following a thorough and rigorous site selection process, taking many technical and other considerations into account, including location, infrastructure, workforce, reasonable business regulations and cost.

Google did not mention it, but a big factor is likely also that Google and China have big “trust issues,” which involve a Mountain View security breach and the Mainland’s efforts to censor Google’s search results. Apple would also want to avoid physically putting its servers in Mainland China to avoid government snooping.  At the same time, Apple wants to be physically and politically close to its fastest-growing region and the world’s most populous nation.

Google’s Data Center is being finished in Tseung Kwan O Industrial Estate in Kowloon. We were told Apple initially considered the same area, but the plots of land were not suitable to the construction cost/scale.

Greater China is Apple’s fastest-growing region and the biggest smartphone market on the planet. Apple CEO Tim Cook told analysts in July 2011 that Apple was “just scratching the surface” in China:

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China was very key to our results. As a reminder, for greater China—mainland China, Hong Kong, and Taiwan—year-over-year it was up over 6 times. And the revenue was approximately $3.8 billion during the quarter. And that makes the year-to-date numbers through the three quarters we’ve had thus far around $8.8 billion. So this has been a substantial opportunity for Apple, and I firmly believe that we’re just scratching the surface right now. I think there is an incredible opportunity for Apple there.

Apple’s move here makes a lot of economic sense. Instead of renting data center space at a premium, Apple rolls its own infrastructure to save a lot of money. In addition, by building its own space physically close to China, it can improve performance of all those data packets, which will not need to traverse the Pacific from Apple’s U.S. Data Centers.

Apple currently has a data center in Newark, Calif., and it recently completed its biggest 500,000 sq. foot-installation in Maiden N.C. Apple is in the planning stages for additional data centers in Reno, Nev. and Prineville, Ore.

We hoping to hear more specifics in the coming weeks.

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