PKI - Can we maintain root CA and HSM in the data center and have issuing CA on the cloud to issue certs, integrated with cloud HSM?
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The formal answer is: "Check your Certificate Policy (CP)"
But as you've asked this question, it's fair to assume that you haven't got a CP.
The CP will define your policies covering the generation, storage, usage and management of keys and other factors such as training, physical and network security, policy for requesting certificates etc. CPs follow a pre-defined format for convenience, which is defined in RFC 3647
However, your proposal is a pretty standard design these days, given the proliferation of cloud based deployments.
Have your root CA offline, with a HSM. If you can, use a USB or PCIe HSM for this and only use it to sign the issuing CA(s) certificates and to generate CRLs.
Your issuing CA could be in the cloud with a cloud HSM.
Do bear in mind though that with a setup such as this, the CA's image (such as the live disk image or a backup) may be accessible to the operators of your cloud provider. There is a risk here that they (or some third party) may be able to gain access to any passphrases, certificates or keys required to access your HSM.
An alternative would be to also host this within your datacentre, where you may trust the operators more; or a hybrid where your CA is in the datacentre and the HSM in the cloud (again, depending on your level of trust of these providers).
In the end, this is your decision, which would normally be formally defined in your CP.