Goldman Sachs | China Data Centers: Expert Meeting on Demand, Supply, and Pricing Trends
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Goldman Sachs hosted an investor meeting with a Chinese data center industry expert to discuss demand and supply dynamics, regulatory approvals, chip availability, and pricing trends. Orders from hyperscale clients have reached 2-3 gigawatts year-to-date, and are projected to hit 4-5 gigawatts by the end of 2026. Industry demand is expected to remain robust through 2028, though growth beyond that depends on macroeconomic conditions and domestic chip output.
Currently, 70-80% of artificial intelligence demand is for inference rather than training. Latency-sensitive and monetizable services are deployed near Tier 1 cities, while latency-insensitive workloads are migrating to central and western regions. Xinjiang is increasingly favored due to ultra-low electricity prices, abundant land, and high renewable energy penetration.
At the national level, regulatory window guidance aims to control the pace of data center supply growth, with approvals potentially accelerating after the Two Sessions. Domestically produced chips meet less than 30% of AI demand, forcing reliance on imported processors and third-party compute leasing. To access advanced GPUs, some hyperscalers are building or leasing capacity in Southeast Asia, despite costs reaching RMB 600/kW/month compared to RMB 200-300 in parts of China.
Wholesale data center prices may face pressure in 2026, particularly in Inner Mongolia and eastern China. However, prices are expected to stabilize and recover starting in 2027 as high-quality resources become scarcer due to regulatory constraints. Among covered stocks, Goldman Sachs rates GDS, VNET, and SUNeVision as Buy, while assigning a Sell rating to Sinnet.