Latin America has entered a new, fast-moving phase of digital infrastructure expansion: the rollout of 5G, surging cloud adoption and the explosive demand for AI compute are together turning the region into a crowded construction site for data centers and cloud regions. Major hyperscalers and high‑profile technology firms are committing multi‑billion‑dollar projects, new submarine cable landings are re‑mapping connectivity, and governments are rewriting incentives and permitting regimes to catch up with the scale and speed of demand. The economic upside is real, but so are the risks — from strained power grids and scarce water in drought‑prone areas to regulatory fragmentation and local community pushback. The picture emerging across Brazil, Mexico, Chile, Colombia, Argentina and other markets is one of rapid opportunity tempered by significant operational and environmental complexity.
Background / Overview
The convergence of three forces —
5G deployment,
cloud region rollouts, and
AI‑driven processing demand — is the primary engine driving data‑center projects in Latin America. 5G raises latency and throughput expectations for mobile and edge applications, prompting telcos, cloud providers, and enterprises to place compute closer to users. At the same time, hyperscalers are localizing cloud regions to satisfy data‑sovereignty, latency, and enterprise demand for AI training and inference. This combination creates a classic “data gravity” effect: as services and users cluster, more capacity and interconnection follow.
Hyperscalers and content platforms are responding in kind. Amazon Web Services (AWS), Microsoft Azure, Google Cloud and regional operators are investing billions to create in‑region cloud regions and interconnection hubs. Independent colo operators and local developers are building campuses sized for hundreds of megawatts (MW) of IT load. The result is a layered market that includes hyperscaler sovereign regions, wholesale gigawatt‑class campuses, and smaller edge and colocation facilities — all vying to supply latency‑sensitive and compute‑intensive workloads.
The major hubs: country‑by‑country snapshot
Brazil: scale, renewables and political momentum
Brazil is the largest market in Latin America by scale and is currently the central stage for many headline projects. The country benefits from abundant renewable energy sources in multiple regions and a dense international connectivity footprint through multiple subsea cable landings and terrestrial fiber routes. These strengths make Brazil an attractive location for hyperscalers seeking low‑carbon power and strong international transit. Multiple reports show Brazil climbing toward the global top‑10 list of data‑center markets, driven by São Paulo, Rio de Janeiro and coastal northeastern states. A major recent development: ByteDance’s TikTok announced plans to build a large data center near the Pecém port complex in Ceará. Multiple outlets report a headline investment figure in the range of 200 billion reais (about US$37.7 billion), a figure that has been widely cited in business press coverage and government statements. That figure is unusually large for a single campus and has been reported alongside earlier, smaller estimates — a discrepancy we examine below. Strengths:
- Renewable energy availability (wind potential in Ceará, hydro and other sources in the south).
- Dense international connectivity via subsea cable landings that lower latency to North America and Europe.
- Large domestic demand from streaming, gaming, fintech and near‑shoring.
Risks and constraints:
- Brazil’s corporate tax and import regime can raise operational costs for hyperscalers and equipment suppliers; the government has introduced incentive regimes linking renewable energy usage and R&D allocations to attract investment.
- Grid capacity and local transmission upgrades remain a gating factor for megawatt‑scale campuses; grid expansion timelines can lag project construction schedules.
Practical note on reporting differences: early Reuters coverage and some government statements cited initial estimates of ~50 billion reais (~US$9–10 billion) for Pecém projects tied to TikTok; later business‑press coverage reported a much larger 200 billion reais figure. Both numbers are present in public reporting — the larger headline figure has circulated widely but remains materially larger than earlier project filings. Where possible, confirm contract‑level figures and signed PPA values when evaluating project economics.
Mexico: Querétaro and the AWS Mexico (Central) Region
Mexico’s data‑center market has concentrated growth in the BajĂo region — particularly
Querétaro — which combines proximity to Mexico City, favorable industrial zoning and strong fiber connectivity. Querétaro has attracted the bulk of Mexico’s colocation and hyperscale development; industry reports describe it as the country’s most active hub and a primary landing zone for inter‑regional fiber. Market inventories and development pipelines are expanding rapidly, placing pressure on regional power infrastructure and prompting utility and permitting coordination. A headline development in 2025:
AWS launched the AWS Mexico (Central) Region and announced a long‑term investment commitment of
more than US$5 billion over 15 years, accompanied by local community and skills programs tied to the launch. That region opens a path for lower latency cloud services and AI infrastructure inside Mexico, and it is explicitly positioned to support enterprise, public sector and developer needs across the country and the broader region. The AWS Mexico Region includes multiple Availability Zones and is part of the company’s multi‑region expansion strategy. Operational challenges:
- Rapid demand growth is stressing local electrical networks; grid reinforcement, substations and PPAs are required to match hyperscaler schedules.
- Policymakers and operators want faster permitting and clearer energy procurement rules to reduce development risk.
Chile: a regional AI and cloud focus — AWS and Microsoft commitments
Chile is positioning itself as a regional cloud and AI hub. In 2025 AWS announced an infrastructure region with plans to invest
more than US$4 billion in cloud infrastructure in Chile, targeting an operational timeline around late 2026. That project will add a Chilean AWS region to the providers’ footprints and is explicitly framed to serve Chile and neighboring South American markets. Microsoft has also committed to a significant presence in Chile: it launched a cloud region in Santiago and tied
roughly US$3.3 billion of direct investment and job/skills programs to its rollout. These two announcements together materially reshape Chile’s data‑center landscape. Environmental concerns are central in Chile. The country’s long‑running drought and sensitive aquifer systems have triggered environmental litigation and project rework, forcing cloud providers to adopt air‑cooled designs and reduce reliance on evaporative water cooling. Chilean authorities are concurrently pursuing regional decentralization policies to attract projects to high‑renewable zones like Atacama and Magallanes, but local water and energy tradeoffs remain a core issue.
Colombia: connectivity, BPO strength and cloud growth
Colombia’s digital infrastructure and data‑center footprint have expanded steadily. Bogota hosts the lion’s share of existing capacity, and the country has been building out subsea landing points to strengthen international connectivity. Colombia’s business‑services sector is highly competitive in offshoring metrics and has a growing cloud market. Public reporting in regional press references multiple data‑center projects and a fast‑growing mobile market with rapidly scaling 5G adoption, which in turn fuels demand for local compute for edge and digital services.
That said, some statistics reported in local outlets vary by source; for example, claims about exact numbers of data centers, total MW of capacity, or the count of submarine cables landing in Colombia should be confirmed against telecom regulator and operator filings for project‑level accuracy. Where the numbers are material to planning, obtain operator inventories or regulator registries.
Argentina and others: idle capacity today, modernization tomorrow
Argentina’s market demonstrates a different challenge:
significant idle capacity exists in older facilities, but much of the country’s electrical distribution and datacenter surface area requires modernization to serve AI workloads and hyperscale requirements. The country also has energy resources (gas associated with oil production and nuclear generation potential) that could be harnessed for on‑site or regional power supply for data centers, but leveraging those sources requires planning, PPA structures and sometimes regulatory reform. Large external commitments — including reported multinational interest tied to AI infrastructure — are forcing deeper planning around how local companies and suppliers can participate in the supply chain.
What the hyperscaler and platform pledges mean — and how they differ
Hyperscaler announcements are not all equal: some are
operational commitments (signed PPAs, land purchases and construction milestones), while others are
strategic pledges that signal future intent and economic impact modeling. For practitioners and planners, distinguishing between these categories is essential.
- Verifiable operational moves: multi‑zone cloud regions with published Availability Zone designs, signed construction contracts, and concrete PPA or feasibility filings. Examples include the AWS Mexico (Central) Region launch and AWS Chile region commitments, which included timelines and investment figures in official releases.
- Strategic pledges and headline figures: large announced sums that may aggregate planned multi‑year investments or include indirect economic impact models. The TikTok (ByteDance) Pecém commitments have appeared in both local government statements and press reporting with differing headline totals — illustrating how announced numbers can vary depending on whether they include downstream supply‑chain impact, future phases, or associated energy projects. Cross‑checking press reports, regulatory filings and corporate releases is necessary to reconcile differences.
When planning infrastructure or negotiating supply contracts, require milestone‑based documentation (land title, PPA execution, environmental permits, equipment purchase agreements) rather than relying solely on press statements of total potential spend.
Environmental and infrastructure risks: power, water, and community
The rapid buildout of data centers raises concentrated environmental and utility risks:
- Power demand and grid capacity: Hyperscale campuses require large, predictable power deliveries. Where grids lack spare transmission capacity, projects face long lead times for substation builds and transmission upgrades. That mismatch creates a core execution risk: equipment and racks can be delivered faster than a utility can energize them. Multiple industry analyses point out that securing firm PPAs and utility interconnection milestones is the single most important gating element for reliable project delivery.
- Water usage and cooling strategy: In drought‑sensitive regions (for example Chile’s central regions), evaporative cooling and water‑intensive designs have triggered legal and environmental challenges. Providers are now emphasizing air‑cooled designs, closed‑loop systems and non‑evaporative cooling where possible to mitigate both regulatory and reputational risk. Microsoft and AWS have publicly discussed cooling strategies for Chile projects to address these concerns.
- Local community and permitting friction: Large campus projects change local economies, but they also compete for land, water and skilled staff. Transparent community engagement, clear environmental impact assessments and staged workforce development programs are essential to avoid litigation and reputational damage that can pause projects for months or years.
Economic and strategic benefits
Despite the risks, the benefits are significant and multilayered:
- Job creation and skills development: Hyperscaler projects often include skilling initiatives, apprenticeships and supplier development programs that raise the local talent pool for cloud operations and AI engineering.
- Digital sovereignty and enterprise modernization: Onshore cloud regions let regulated sectors (banking, healthcare, government) meet data‑residency requirements while gaining access to advanced AI services.
- Near‑shoring and regional ecosystems: The presence of regional cloud regions and carrier landing points makes Latin America more attractive for near‑shoring digital operations for North American and European companies looking for cost, timezone and cultural alignment.
Practical guidance for stakeholders
For IT leaders and corporate procurement teams
- Prioritize contractual protections for power and interconnection. Require firm PPA milestones and clear interconnection timelines before accepting critical cutover dates.
- Use multi‑region, multi‑provider strategies for mission‑critical services to avoid single‑vendor availability risks while negotiating for sovereign cloud options where required.
- Include water‑usage and sustainability clauses in RFPs — demand vendor evidence of non‑evaporative cooling, regional water‑impact studies and renewable procurement strategies.
For data‑center developers and investors
- Secure land parcels in pre‑permitted data‑center parks with guaranteed utility corridors; this compresses approval lead times.
- Lock long‑term renewable PPAs and consider behind‑the‑meter generation plus storage to provide firm, dispatchable power during grid upgrades.
- Stage investments: deliver modular capacity in phases tied to confirmed preleases and long‑form commitments.
For policymakers
- Create single‑window permitting and transparent approval checklists for data‑center projects to reduce timing uncertainty.
- Incentivize 24x7 renewable procurement (not just REC matching) through frameworks that support storage and firming solutions.
- Balance regional development with environmental safeguards: require robust impact assessments, community consultation and measurable water‑conservation plans.
What to watch next
- Project execution vs. headline pledges: track PPA signings, land transfers and environmental permits to judge whether announced investments will translate into live capacity.
- Water and grid litigation trends: regions that rely on evaporative cooling or require major transmission work are the likeliest to face delays and legal scrutiny.
- Equipment and GPU supply chains: AI projects hinge on timely delivery of accelerators (GPUs, custom silicon). Delivery schedules and vendor commitments will impact commissioning timelines and utilization.
- Regional interconnection and subsea cable maps: as undersea cables land and new PoPs are built, latency corridors will shift and new hubs will emerge.
Verifiability and cautionary notes
Several of the figures circulating in regional press and industry roundups merit careful scrutiny:
- The TikTok (ByteDance) project in Pecém has been reported with differing headline amounts (earlier coverage referenced ~50 billion reais / US$9–10 billion; later reports cite 200 billion reais / ~US$37.7 billion). Both figures appear in reputable outlets; readers and planners should confirm which number corresponds to signed contracts, committed capex, or modeled regional economic impact.
- Country‑level counts such as “Brazil has 195 data‑center projects” or specific MW inventories for Mexican states (e.g., the Querétaro figures reported in some summaries) are useful directional guides but often derive from localized inventories or proprietary market reports that use differing inclusion criteria (operational, under construction, planned). Treat single‑source tallies as indicative and cross‑check with regulator filings or operator disclosures when planning procurement or investment.
- Reports that attribute a specific dollar figure to OpenAI (for example a US$25 billion headline tied to regional projects) were not corroborated in readily available primary filings at the time of reporting. If an investment figure is material to decision‑making, require supporting documentation (press release by the company, regulatory filing, or signed inter‑party agreement). Where claims could not be verified across multiple reputable sources, this article flags them as unverified and recommends verification with primary sources.
Conclusion
Latin America’s digital infrastructure landscape is being reshaped in real time. The combination of
5G rollout,
cloud region expansion, and
AI‑driven compute demand is attracting unprecedented levels of capital and creating new regional tech hubs. The upside for local economies and enterprise digital transformation is substantial: lower latency, sovereign cloud options and new opportunities for near‑shoring and modern services.
But the scale and speed of the buildout also expose execution and environmental risks: insufficient transmission capacity, water constraints in drought‑exposed regions, and the need for faster, clearer permitting frameworks. The technical reality for providers and enterprise IT teams is straightforward: treat press‑headline investments as the beginning of a due‑diligence process, not a guarantee of capacity on a specific date. Insist on contractual milestones tied to PPAs, transmission energization, and environmental permits — and incorporate multi‑region resilience and sustainability requirements into procurement.
For governments and regulators, the task is to move from reactive incentives to predictable playbooks that align land, power and water policy with strategic digital infrastructure goals. For IT leaders and investors, success will come to those who pair the technology imperative — low latency and AI readiness — with sober operational planning and a commitment to sustainable, community‑sensitive deployment strategies.
The region’s future as a hub for cloud, streaming, gaming, fintech and AI workloads is real — but converting headline dollars into reliable, sustainable infrastructure will require coordinated execution across industry, utilities and public policy.
Source: The Costa Rica News
Latin America Accelerates Data Center Construction in Response to the Advance of 5G ⋆ The Costa Rica News