Brazilian datacenter developer Scala is actively pitching Chinese and US technology companies for capacity partnerships and investment.

Brazilian data center developer Scala Data Centers, backed by DigitalBridge Group, is pitching a city-sized project to foreign tech companies as Brazil races to capture AI-driven investment and capitalize on its geopolitical advantage. Construction of the first phase of the Scala AI City is expected to start later this year, according to Senior Vice President Luciano Fialho. The company is in talks with US and Chinese technology giants to secure a hyperscaler to use the facilities for AI servers and high-performance chips.

The first phase would cost Scala about $500 million for the infrastructure, while a hyperscaler would spend multiple times that on computing equipment for artificial intelligence. US and Chinese cloud providers could use separate facilities at Scala AI City without risking data security, Fialho said. Scala has secured approval for power connection of up to 5 GW for the project in the region of Porto Alegre, about as much as the power consumption of Sao Paulo or London, with one gigawatt equivalent to a traditional nuclear reactor.

Brazil's position as a geopolitically safer location for critical infrastructure has become increasingly attractive following drone strikes on data centers in countries including Iran, the United Arab Emirates and Bahrain. Abundant supplies of renewable energy, the largest number of high-speed fiber-optic cables in South America, and an interconnected national power grid make Brazil the best-positioned country in the region to tap the global boom in data centers. "Brazil has a window of opportunity," Fialho said. "It's a great opportunity for the country to position itself and bring in billions in investments." Leandro Evaldt, the economic development secretary of Rio Grande do Sul, where Scala AI City is located, added that "It's a project that will further boost our economy and establish the state as a benchmark in technology and innovation in Brazil and Latin America."

Scala was created by DigitalBridge in 2020 after the investment firm acquired data-center assets from Brazil's UOL Diveo. Japanese conglomerate SoftBank Group Corp. has agreed to acquire DigitalBridge for about $3 billion as part of a push into data centers and artificial intelligence. The company also plans to expand other data center projects in Brazil this year, including a campus in Sao Paulo where it has invested about 12 billion reais ($2.4 billion) and will continue expanding to reach 600 MW.