OpenAI's $7 Billion Australia Push: First 'OpenAI for Countries' in APAC
OpenAI announced a $7+ billion AUD partnership with NEXTDC to build a hyperscale AI campus in Sydney, marking the company's first initiative in the Asia-Pacific region under its "OpenAI for Countries" program.1 The project will provide sovereign compute capability for Australian government, defense, finance, and research organizations.2 Phase 1 delivery targets the second half of 2027.3
The S7 AI Factory
NEXTDC CEO Craig Scroggie characterized the development as an "S7 AI factory" that will establish Australia's position in the global AI infrastructure landscape.4
Project Specifications
| Aspect | Details |
|---|---|
| Investment | $7+ billion AUD (~$4.64B USD) |
| Location | Sydney, Australia |
| Partner | NEXTDC |
| Phase 1 | H2 2027 |
| Focus | Sovereign compute capability |
Target Customers
The facility will serve sensitive workloads across critical sectors:5
- Government: Federal and state agency AI deployments
- Defense: Australian Department of Defense applications
- Finance: Banking and financial services AI
- Research: Academic and scientific computing
- Enterprise: Large-scale corporate AI initiatives
OpenAI for Countries
The Australia partnership represents OpenAI's expansion of its national infrastructure program beyond initial deployments.6
Program Structure
"OpenAI for Countries" establishes sovereign AI infrastructure in partner nations, addressing concerns about:7
- Data sovereignty requirements
- Cross-border data transfer restrictions
- National security considerations
- Latency for local users
- Economic development goals
Australia becomes the first APAC nation in the program, following earlier announcements in other regions.
Broader Australia Expansion
OpenAI's entry joins a wave of AI infrastructure investment in Australia.
Project Southgate (1.6 GW)
AI cloud firm Firmus announced a strategic alliance with CDC for "Project Southgate":8
| Specification | Details |
|---|---|
| Capacity Target | 1.6 GW |
| Location | Melbourne |
| Anchor Tenant | NVIDIA DGX Cloud |
| Status | Planning/development |
NVIDIA's DGX Cloud will establish a regional presence at the Southgate Melbourne facility.9
Google Christmas Island
Google is quietly planning construction of a large AI data center on Christmas Island, Australia's remote territory in the Indian Ocean.10 The project follows a cloud computing agreement between Google and the Australian Department of Defense.11
The remote location offers: - Strategic positioning for APAC connectivity - Distance from population centers - Potential defense applications - Unique sovereignty characteristics
Groq Expansion
Groq deployed AI infrastructure in Sydney in late 2025 and aims to establish 12 additional data centers in 2026, with specific focus on Asia.12
Market Transformation
Australia's data center market is undergoing rapid expansion driven by AI demand.
Capacity Projections
| Metric | 2024 | 2030 |
|---|---|---|
| Total Capacity | ~1,500 MW | 3,100+ MW |
| Market Size | $4.5B | $7.8B (2032) |
Capacity will more than double by 2030, supported by major projects across Tasmania, Melbourne, and other states anchored by AI workloads.13
Economic Impact
Consulting analysis projects significant economic benefits:14
| Impact | Projection |
|---|---|
| GDP Addition | ~$80 billion by 2030 |
| Jobs Created | ~100,000 |
| Sectors | Construction, operations, supply chains |
Energy Implications
The Australian Energy Market Operator (AEMO) forecasts data centers to demand up to 10% of the country's power supply by 2035.15 This projection creates urgency for:
- Renewable energy expansion
- Grid infrastructure investment
- Power purchase agreements
- On-site generation development
Strategic Context
Sovereignty Drivers
Australia's embrace of sovereign AI infrastructure reflects global trends:16
- Increasing data localization requirements
- National security concerns about AI dependencies
- Desire for domestic AI capability development
- Competitive positioning in APAC
AUKUS Implications
The defense-linked nature of several projects (Google's DoD agreement, sovereign compute focus) suggests AI infrastructure plays a role in broader strategic partnerships including AUKUS.17
Key Takeaways
- $7B+ First Mover: OpenAI's largest APAC investment establishes Australia as regional AI hub
- Sovereign Focus: Government, defense, and finance workloads driving facility design
- 1.6 GW Southgate: Firmus/CDC project with NVIDIA DGX Cloud anchor
- Capacity Doubling: 1,500 MW → 3,100+ MW by 2030
- 10% Power Demand: Data centers approaching significant grid load by 2035
- $80B GDP Impact: AI infrastructure driving major economic development
Australia is positioning itself as the APAC hub for sovereign AI compute, with OpenAI's entry validating the strategy and likely attracting further investment.
References
-
Data Centre Magazine. "How Will $4.6bn NEXTDC AI Campus Drive OpenAI for Australia?" https://datacentremagazine.com/news/how-will-nextdc-ai-campus-drive-openai-for-australia ↩
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Ibid. ↩
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Ibid. ↩
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Ibid. ↩
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Ibid. ↩
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ConstructConnect. "Global Watch: 'OpenAI for Australia' Brings Data Center Trend Down Under." https://news.constructconnect.com/global-watch-openai-for-australia-brings-data-center-trend-down-under ↩
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Analysis based on program structure. ↩
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Data Center Dynamics. "AI cloud firm partners with CDC for Australian data center capacity." https://www.datacenterdynamics.com/en/news/ai-cloud-firm-partners-with-cdc-for-australian-data-center-capacity/ ↩
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Ibid. ↩
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SubTel Forum. "Google to Build AI Data Center on Christmas Island, Australia." https://subtelforum.com/google-to-build-ai-data-center-on-christmas-island-australia/ ↩
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Ibid. ↩
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BeBeez. "Groq deploys AI infrastructure in data center in Sydney, Australia." November 2025. https://bebeez.eu/2025/11/17/groq-deploys-ai-infrastructure-in-data-center-in-sydney-australia/ ↩
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Vocal Media. "Australia Data Center Market: Digital Infrastructure, Cloud Expansion & the Future of High-Tech Capacity." https://vocal.media/trader/australia-data-center-market-digital-infrastructure-cloud-expansion-and-the-future-of-high-tech-capacity ↩
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The Aussie Corporate. "Australia's AI Data Centre Moment." https://theaussiecorporate.com/blogs/pickandscrollnews/australia-s-ai-data-centre-moment ↩
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Channel Life. "AI, data governance & edge to define 2026 for Australia." https://channellife.com.au/story/ai-data-governance-edge-to-define-2026-for-australia ↩
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Security Brief. "Australia's cloud security & AI strategies to shift by 2026." https://securitybrief.com.au/story/australia-s-cloud-security-ai-strategies-to-shift-by-2026 ↩
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Analysis based on defense partnerships mentioned in sources. ↩
