VENDORiQ: Impact of Trump’s Stargate Program

Why It’s Important

The Stargate program will likely impact Australia in the following ways:

AI Infrastructure Deployment

In recent years, Australia has invested heavily in data centres, and it looks set to continue for general computing. It is expected that the total investment in Australian data centres by 2027 will be AUD100 billion. However, an issue that is overlooked is the availability of AI chips. These are already in short supply globally, and with the US looking to expand data centres for AI usage rapidly, that shortage will only worsen. Australia is not at the top of the queue for the main recipients of the announcement (OpenAI, Microsoft, Oracle, etc.). As a result, we may see a slowdown in local AI infrastructure deployment. This has significant implications for sovereign AI programs, which is discussed in more detail below.

Global AI Chip Supply

While the announcement talks a great deal about ‘made in the USA’ and repeatedly slams China, the reality is that most components – especially AI chips – are manufactured in the Asian region—around 50 per cent by Taiwan’s TSMC. In the short term, there is not much risk that Trump’s anti-China rhetoric will impact trade with the primary AI chip producers. However, tensions emerging in the region due to the administration’s broader trade policies may create an unstable supply chain. This could further impact Australia with sharply rising global chip costs.  

Energy Cost Discrepancies

AI places a significant energy demand. According to Trump’s speech, the US will fast-track approvals for not only data centres but also energy infrastructure to support them. From a competitive perspective, in Australia, energy prices vary widely from state to state. How these energy cost discrepancies will impact AI service costs on a global geographic basis is yet to be defined, and Australian firms looking at AI costs will need to track this issue closely.

Impact of Hyperscale Giants Windfall

A chunk of the USD500bn is going to Microsoft, OpenAI and Oracle, while AWS and Google are conspicuous by their absence in Trump’s speech. IBRS expects AWS and Google to lobby hard to get a stake in Stargate. However, the issue for Australia is that the guaranteed revenues from Stargate will mean that Microsoft (in particular) will have additional investment dollars that they can spend on expanding proven markets. Australia is very much a proven and expanding market (note Microsoft’s Oct 2023 investment announcement of AUD3 billion). So not only does the Stargate investment bolster the likelihood of Microsoft’s planned investment target for Australia, but it may also see an expansion. What this means for AWS and Google’s investments locally is an unknown.

Cyber Security Silence

The program’s announcement did not mention cyber security. Cyber security is the most significant risk—both economically and for stability—facing advanced economies and is directly linked to the various ‘bad actors’ the Trump administration has been naming. 

The incoming administration is likely reviewing the executive order issued by the previous administration on January 16, 2025, titled Strengthening and Promoting Innovation in the Nation’s Cybersecurity, which focuses on the integration of advanced technologies like AI and critical infrastructure protection. Indeed, the link to this executive order has since been removed from the Whitehouse website. While comprehensive and sensible, the extensiveness and tight implementation deadlines outlined in the executive order may overwhelm agencies that are already facing tight budgets and limited resources.

However, IBRS believes the administration will likely develop a separate cyber security program in the coming months, with links to friendly nations, including Australia. Even so, IBRS flags concern that the impact and opportunities for cyber crime only grow with the vast investment in US cloud and AI infrastructure.

Australian Data Sovereignty and AI Deployment

Related to the above, many countries’ political bodies will feel concerned about the ‘America First’ policies, and we will likely see a new wave of ‘Patriot Act’ concerns. The result will likely be a reiteration and expansion of sovereign data policies. Australia already has strong sovereign data policies in the public sector and some essential industries. Expect these to be revisited, and more attention will be paid to governance and adherence to such policies.

The above significantly impacts Australian AI deployment. While AI vendors may claim that ‘the data stays in your local storage’, the reality is that the indexes and processing often happen in overseas data centres. With the US soaking up AI hardware, the ability to find sufficient AI resources at a workable price point in Australia may result in roadblocks to AI adoption in Australia. 

Who’s Impacted

This report is relevant for:

• Chief information officers (CIOs)
• Chief technology officers (CTOs)
• Data centre managers
• Cyber security professionals
• Heads of innovation and R&D
• CEOs and business leaders in technology-related industries
• Government officials and policymakers involved in technology and innovation

Next Steps

CIOs and ICT teams should consider the following steps to prepare for the potential impacts of the Stargate program:

• Assess the potential impact of increased competition for investment capital on their organisation’s strategic plans. This includes evaluating funding sources, diversifying investment strategies, and exploring potential partnerships to enhance competitiveness.
• Monitor the development of US AI standards and regulations and evaluate their potential impact on the organisation’s operations and compliance requirements. This may involve engaging with industry bodies and government agencies to understand the implications of aligning with US standards.
• Identify potential areas of specialisation and expertise within the organisation that could offer opportunities for collaboration with US companies in the AI sector. This includes assessing the organisation’s technological capabilities and exploring potential partnerships to leverage niche strengths.
• Evaluate the strategic implications of the Stargate program on the organisation’s data centre strategy. This may involve assessing the relative advantages of maintaining or expanding data centre operations in Australia versus exploring alternative locations, considering cost and, importantly, security.
• Proactively engage with industry stakeholders, government agencies, and research institutions to understand the evolving AI landscape and develop strategies to navigate the challenges and opportunities presented by the Stargate program. This includes participating in industry forums, fostering collaboration, and contributing to policy discussions.