Alessandro Lombardi, President and Chairman of Elea Data Centers.
Throughout my career, I’ve witnessed numerous technological shifts, but none as transformative as the current artificial intelligence (AI) revolution. The demand for AI-ready infrastructure is skyrocketing, and with it comes the critical need for strategic locations to host these facilities—with Brazil poised to become a global hub for AI data centers.
The Booming Brazilian Tech Ecosystem
Brazil’s tech sector is experiencing unprecedented growth, creating a fertile environment for AI innovation. Latin America’s IT industry continues to grow, attracting substantial investment. Venture capital flowing into Brazilian startups reached $2.8 billion in 2023, increasing 35% from 2022.
In the 2023 Global Innovation Index (GII), which ranks the world’s most innovative economies based on 80 different social and economic factors, Brazil climbed five positions to rank 49th globally and first in Latin America.
This improvement reflects the country’s increasing R&D expenditure, which reached 1.15% of GDP. While this figure still lags behind some developed nations, it represents an increase from 2020, showcasing Brazil’s dedication to closing the innovation gap.
Strategic Geographic Advantage
Brazil’s geographic position offers unique advantages for data center operations, particularly for AI applications that require low latency and high reliability. With over 7,000 km of coastline, Brazil has direct access to major submarine cable systems connecting the Americas, Europe and Africa. The cables have significantly improved Brazil’s international connectivity, providing a 50% increase in network performance, according to the companies involved in the project.
According to a 2023 study, Brazil’s average fixed internet speed increased by 17.1% year-over-year, reaching 14.27 Mbps. This puts Brazil on par with several developed nations and positions it as a prime location for data-intensive AI operations.
Government Support And Policy Initiatives
The Brazilian government has introduced several initiatives to support AI investments. The “Lei de Informática” (Informatics Law) provides tax incentives for companies investing in R&D in the ICT sector, while the National Internet of Things Plan aims to foster the development of IoT and AI technologies.
Earlier this year, the Brazilian government announced a new AI strategy, committing R$23 billion over the next four years to promote AI research and development with funding for AI research centers, scholarships and incentives for companies adopting AI technologies.
Untapped Potential In The Data Center Market
According to Arizton Advisory & Intelligence, the Brazilian data center market is expected to reach $4.72 billion by 2029, growing at a CAGR of 7.16% from 2021 to 2029.
Rapid digitalization across industries is driving Brazil’s demand for data center services. According to a Goldman Sachs report, this trend aligns with global patterns, where data center power demand is predicted to grow 160% by 2030, with this growth partly driven by AI applications and the compute power required to power such queries.
Energy Advantages
According to the National Electric Energy Agency (ANEEL), renewable sources accounted for nearly 84% of Brazil’s electricity generation in the first half of 2023.
Renewable energy use is particularly relevant for AI data centers, which are known for their high energy consumption. Brazil utilizes diversified energy sources, with about 60% of energy production coming from hydroelectric power, offering a reliable power supply for the increased demand for AI computing.
Growing Talent Pool
Brazil is rapidly developing its tech talent pool. In fact, the country produces around 53,000 graduates in tech-related courses annually. This number is likely to grow, as the “Brasil Mais Digital” program aims to train people in digital skills in the coming years.
The AI Opportunity
The AI market is experiencing explosive growth, driving demand for specialized data center infrastructure. For example, the AI market for healthcare is expected to expand by 38% from 2019 to 2027 in Latin America, aligning with my company’s observations of increasing demand for AI-ready data center infrastructure.
Many Brazilian companies have started using or are planning to implement AI solutions. This rapid adoption is creating a surge in demand for local, high-performance data center services capable of supporting AI workloads.
The Time To Act
I think the numbers speak for themselves: Numerous factors point to Brazil as the next frontier for AI data centers. Companies that recognize this potential now and take decisive action will likely be best positioned to capitalize on the AI revolution in Latin America and beyond.
So, how best to get started?
When considering entering the Brazilian market, company leaders should understand the region’s unique landscape, including recognizing diverse regulatory environments and varying levels of technological adoption in the various regions. I encourage prospective investors to engage with local stakeholders and government agencies (or partner with a company well-versed in these relations) to navigate these complexities and capitalize on technology investment incentives.
Addressing the skills gap can be challenging. Implementing targeted training programs in collaboration with universities and technical schools can help cultivate a skilled workforce. These programs should focus on both foundational skills in data science and AI, as well as practical, hands-on experience with real-world applications.
Moreover, creating awareness about the benefits of AI in various sectors, such as agriculture, healthcare and finance, can stimulate interest and engagement, encouraging more individuals to pursue careers in this field, as well as more investments.
I think the question for forward-thinking tech companies and investors is no longer whether to invest in Brazil but how quickly they can establish a presence in this emerging AI powerhouse. The future of AI is being shaped now, and Brazil is set to play a pivotal role. Will you be part of this exciting transformation?
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