The figures, according to Synergy Research Group, follows a similar pattern to Q1 2019. Last year’s Q1 was boosted by Google’s $2.4 billion purchase of Manhattan property. Excluding this sale, Q1 capex was also down 2% year-on-year.
Figures point to China as the biggest factor stalling hyperscale capex growth. Alibaba, Tencent, JD.com and Baidu all significantly reduced their capex spending resulting in a 37% year-on-year reduction in Chinese hyperscale capex. This news comes in direct contrast to the rest of the world. In the US hyperscale capex was up 5% year-on-year, in EMEA, APAC excluding chine and the rest of the world capex growth fell within the 2 - 3% range.
“Usually it is the big five that dictate the scale and trends in hyperscale capex, but the drop-off in spending in China has been so marked that an otherwise strong worldwide growth story has been transformed into a modest capex decline,” said John Dinsdale, a chief analyst at Synergy Research Group. “If we take China out of the data then hyperscale capex grew 4% over the record-setting levels seen last year. In aggregate across Google, Amazon, Microsoft, Facebook and Apple, Q2 capex increased 7%. The situation in China is likely to be a short-term phenomenon; however, as the four Chinese hyperscale operators continue to grow revenues more rapidly than their US-headquartered counterparts. After some short-term financial belt-tightening, we expect to see Chinese capex rise strongly once again.”
Synergy’s hyperscale data is based on the capex and data centre footprint of 20 of the world’s major cloud and internet service firms, including the largest operators in IaaS, PaaS, SaaS, search, social networking and e-commerce. The top five hyperscale spenders in Q2 were Google, Amazon, Microsoft, Facebook and Apple, whose capex budgets far exceed the other fifteen hyperscale operators. Four of them saw big increase in capex spending in Q2, with Apple being the exception. Outside of the top five, other leading hyperscale spenders include Alibaba, Tencent, IBM, JD.com, Baidu and Oracle.
