HANOI (Reuters) – Singaporean asset management firm Keppel and Vietnam’s Sovico Group are in discussions about plans to develop new undersea fiber-optic cables aimed at bolstering the region’s data center capacity, according to individuals familiar with the matter.
As a key intersection for global submarine cable routes connecting Asia to Europe, Southeast Asian nations are pushing to expand their digital infrastructure to support the growing demand for artificial intelligence (AI) services and data centers. Vietnam, in particular, has set an ambitious goal to install 10 new submarine cables by 2030.
Strategic Importance Amid US-China Tech Rivalry
Undersea cables, which carry the vast majority of global internet traffic, have become a focal point of the ongoing tech competition between the United States and China. Both countries are actively competing for contracts to construct and maintain these critical infrastructure projects, especially in Asia, where the stakes are high for controlling the flow of sensitive data.
One proposal under consideration involves a direct undersea cable connecting Vietnam and Singapore, insiders revealed. This project is estimated to cost $150 million, according to a source with detailed knowledge of the discussions.
While Sovico is reportedly in favor of this direct connection, negotiations with Keppel remain fluid, and no final agreements have been reached, two sources familiar with the talks noted. Keppel is said to prefer a larger-scale project involving a consortium of investors.
The alternative plan envisions a more extensive submarine cable route connecting Singapore and Japan, with additional links to other countries along the way. In this scenario, the Vietnam-Singapore connection proposed by Sovico would serve as a branch of the larger network, according to three individuals with insight into the discussions.
Key Stakeholders Keep Quiet
Sovico, a conglomerate with ventures in aviation, banking, and data center development, declined to comment on the matter. Keppel, which recently announced plans to acquire an AI-ready data center in Japan, also refrained from confirming any details. A spokesperson stated, “We do not comment on market speculation.”
An internal Sovico meeting in November, attended by Vietnam’s Prime Minister Pham Minh Chinh and other digital economy stakeholders, reportedly touched on the company’s submarine cable ambitions, according to one participant. Vietnamese government agencies have not responded to inquiries.
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Minimizing Chinese Influence
No decisions have been made on the contractors for either proposed cable, but sources indicate Chinese firms are unlikely to be involved in the Vietnam-Singapore direct connection. U.S. officials have warned Sovico about potential security risks tied to Chinese contractors and have conducted multiple briefings with Vietnamese and Singaporean representatives to discourage the use of China’s HMN Technologies, sources said.
This initiative is part of a broader U.S. effort to counter the global expansion of Chinese tech firms, including HMN Tech, which was recently linked to other Vietnamese submarine cable projects.
Vietnam’s Digital Aspirations
The Sovico-Keppel plans are separate from previously announced Vietnamese projects, which include four undersea cables backed by various international partners. Among these, Japan’s NEC is expected to lead construction on two cables, while HMN Tech is reportedly involved in a third.
A fourth project, a collaboration between Vietnam’s Viettel and Singapore’s Singtel, aims to establish a direct link between the two countries, although no construction contracts have been finalized.
Vietnam, home to nearly 100 million people, is a growing hub for online platforms but currently relies on just five undersea cable branches for its global internet connectivity. By tripling its cable infrastructure, Vietnam hopes to position itself as a regional data center alternative, despite challenges such as power shortages and stringent data regulations.
Expanding submarine cable networks is viewed as a crucial step toward meeting the region’s digital demands and enhancing Southeast Asia’s role in the global data economy.