Equinix’s $7B xScale Data Center Bet Is Working

The data center giant’s nearly $7 billion xScale data center initiative targeting hyperscale customers such as AWS, Google and Microsoft is now in full swing, with 32 new data centers in the works.

With an extra $3.9 billion put inside its investment wallet this month, data center giant Equinix now plans to build 32 of its hyperscale-focused xScale data centers across the globe that will provide a total of over 600 MW of power capacity.

The Redwood City, Calif.-based colocation and interconnection behemoth expects revenue to reach upward of $6.64 billion in 2021, which would be a 10 percent increase year over year. This year, the fast-growing company ranked on the Fortune 500 list for the first time in its history at No. 461.

Equinix xScale data centers are tailor-made to serve hyperscale companies including the world’s largest cloud service providers—Amazon Web Services, Google and Microsoft. The three companies are spending billions annually on data center space, capacity, colocation services and IT infrastructure. The xScale data centers currently being constructed around the world are specifically built to support the rising demands of cloud services that need to scale rapidly.

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Equinix CEO Charles Meyers said Alibaba Cloud, AWS, Google Cloud, IBM Cloud, Microsoft Azure and Oracle Cloud Infrastructure are leveraging Equinix’s more than 220 data centers to connect to their customers and partners to drive cloud services. The company’s xScale initiative is Equinix’s answer to winning as much hyperscaler revenue share as possible in the coming years from its slew of data center competitors, which includes Digital Realty.

“With our xScale program, these hyperscalers can continue to grow at Equinix while in close proximity to an ecosystem of 10,000 customers,” Meyers said.

Equinix’s 32 xScale Data Center Locations

Over the next several years, Equinix said its xScale data center footprint will span three regions: Europe, Asia-Pacific and the Americas.

Breaking down the locations where Equinix plans to build its xScale data centers in Europe, the company will build five in Frankfurt; four in Paris; three in Dublin; two in London; two in Madrid; as well as one xScale data center each in Helsinki, Milan and Warsaw.

In Asia-Pacific, Equinix will have three xScale data centers in Tokyo as well as three in Osaka. In the Americas, Equinix is opening three xScale data centers in Sao Paulo and one in Mexico City. Three additional xScale data centers will be unveiled in the future.

Equinix launched its first xScale data center in Tokyo in March, followed by the opening of its second xScale center in Paris in February.

Equinix’s Capital Strategy

In June, Singapore’s Government of Singapore Investment Corp. (GIC) Sovereign Wealth Fund, a state-owned investment fund, injected $3.9 billion into Equinix’s xScale data center initiative. GIC will own an 80 percent interest in the future joint ventures and Equinix will own the remaining 20 percent equity interest, according to Equinix.

The $3.9 billion adds to the more than $3 billion Equinix has captured from investors and joint ventures over the past two years in a move to rapidly expand the company’s bullish xScale data center vision and footprint globally.

Equinix’s edge services are tied directly to xScale’s access points, enabling higher-speed connections closer to users and giving hyperscalers the ability to consolidate both their core and access point deployments into a single provider.

“The joint venture arrangement of xScale enables these large deployments to be structured in an off-balance sheet model that aims to preserve capital for investment in our traditional retail data center and digital infrastructure business and maintain our strategic and financial flexibility,” said Equinix’s Meyers.

During Equinix’s Analyst Day 2021 this month, Meyers was bullish about the company’s growth and future. “In the three years since our last Analyst Day, we have added over $1.6 billion in revenue, 20 new data centers, 100,000 new interconnections and entered the Fortune 500,” he said.

This month, Equinix also said it was committed to becoming climate-neutral and set a science-based target for emission reduction across global operations and supply chain by 2030.