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Coronavirus Forces Facebook To Delay Data Center Construction Projects

After spending a whopping $16 billion on hyperscale data center capex in 2019, Facebook is halting construction on two data center projects due to the coronavirus pandemic.

Facebook is halting construction on its new $750 million data center in Alabama as well as the expansion of data centers in Ireland due to the coronavirus pandemic.

The Menlo Park, Calif.-based social media giant, named on CRN’s 10 Hot Hyperscale Data Center Companies To Watch in 2020, is one of the global leaders when it comes to spending billions annually on building and expanding data centers across the globe. Facebook spent approximately $16 billion on data center capex in 2019, according to Synergy Research Group.

In 2018, Facebook unveiled its plans to construct a new data center in Huntsville, Ala., which was expected to be operational by the end of this year. However, the coronavirus crisis has temporarily put a stop to construction. “To help protect the health and safety of construction crews during the COVID-19 outbreak, we are significantly reducing construction activities at our site,” the company recently said in a Facebook post regarding the Huntsville project. “We look forward to welcoming everyone back on site as soon as it’s safe to do so.”

[Related: IDC: Storage And Server Sales Will Fall In 2020 Because Of Coronavirus]

Additionally, Facebook has suspended construction on its massive expansion project at the company’s data center campus in Clonee, Ireland. Facebook said an “appreciation bonus” will be paid to the construction workers who were temporarily removed from the site, according to a report from RTE.

“Together with Mace, our general contractor on site at Clonee, we have made the decision to temporarily suspend construction at the Clonee data center," said Facebook in a statement. “This measure is being taken to protect the health and safety of people who work on our construction sites and the wider community during the Covid-19 outbreak. We look forward to welcoming workers back as soon as it is safe to do so.”

Facebook’s data center in Clonee opened in 2018. Due to high demands, the company last year announced it would double the campus by constructing two new data centers onsite.

The social media kingpin is one of the top five capex spenders in hyperscale data centers alongside Amazon, Apple, Google and Microsoft who each invested billions in data center expansion in 2019, according to data from Synergy Research Group. Hyperscale capex spending on data centers reached an historic high of over $120 billion in 2019, peaking with a record-breaking fourth quarter of well over $32 billion.

Although the coronavirus has stalled Facebook’s construction of its Alabama and Ireland data centers, Synergy’s Chief Analyst John Dinsdale says Facebook and other hyperscale operations like Amazon and Google “are better positioned than most types of companies to ride out the crisis.”

“While there are many unknowns, what is clear is that the hyperscale operators generate well over 80 percent of their revenues from cloud, digital services and online activities. The radical shifts we are seeing in social and business behavior will actually provide some substantive tailwinds for many of these businesses,” said Dinsdale. “These hyperscale firms are much better insulated against the current crisis than most others and we expect to see ongoing robust levels of capex.”

This week, Facebook said it will provide $25 million in emergency grants for local news to support journalism during the coronavirus pandemic. Facebook this month advised its staff to work from home to help combat the coronavirus.

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