"Tech’s Trillion-Dollar Bet on AI Is Everywhere"
The Wall Street Journal
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It’s Not Just Rich Countries. Tech’s Trillion-Dollar Bet on AI Is Everywhere.
Story by Stu Woo • 20h
JAKARTA, Indonesia—Tap water isn’t drinkable. Power outages are common. The national average annual wage is $2,200.
Yet rising on Jakarta’s outskirts are giant, windowless buildings packed inside with Nvidia’s latest artificial-intelligence chips. They mark Indonesia’s surprising rise as an AI hot spot, a market estimated to grow 30% annually over the next five years to $2.4 billion.
The multitrillion-dollar spending spree on AI has spread to the developing world. It is driven in part by a philosophy known in some academic circles as AI decolonization.
The idea is simple. Foreign powers once extracted resources such as oil from colonies, offering minimal benefits to the locals. Today, developing nations aim to ensure that the AI boom enriches more than just Silicon Valley.
Regulations effectively require tech companies such as Google and Meta to process local data domestically. That pushes companies to build or rent data facilities onshore instead of relying on global infrastructure. These investments add up to billions of dollars and create jobs that foster national talent, or so developing nations hope.
“The model is shaping up where it has to be more fair to the country,” said Vikram Sinha, chief executive of Indosat Ooredoo Hutchison, a partially government-owned Indonesian telecom provider building data-center projects across the country.
AI decolonization is a twist on data sovereignty, a concept that gained traction after Edward Snowden revealed that American tech companies cooperated with U.S. government surveillance of foreign leaders. The European Union in 2018 pioneered data-protection laws that other nations have since mimicked.
Regulations vary by country and industry, but the principle is this: If a developing-nation bank wants an American tech giant to store customer data and analyze it with AI, the bank must hire a company with domestically located servers.
Combined with genuine business demand for AI computing, such regulations have made some less-wealthy nations beneficiaries of the AI boom, including in South and Southeast Asia.
Google recently committed $15 billion over five years to build an AI center in India. Amazon Web Services is investing $5 billion to increase infrastructure in Thailand.
Data centers in Indonesia earned $374 million in revenue last year, said research firm Mordor Intelligence, a figure estimated to sextuple by 2030.
Betting big on this new sector is Indosat, Indonesia’s second-largest telecom provider. Its CEO, Sinha, was emboldened by Nvidia Chief Executive Jensen Huang, who championed “ sovereign AI” during a visit to Jakarta last year.
“No country can afford to have its natural resource—the data of its people—be extracted, transformed into intelligence and then imported back into the country,” Huang said at an Indosat event.
Sinha had a chance to ask Huang for advice during a dinner. He recalled the answer: “If you believe in something, go all in.” To Sinha, that belief is AI.
Indosat plans to increase its AI-enabled server power to 500 megawatts by 2028 from 20 megawatts currently, in data centers with backup electricity. By comparison, said research firm DC Byte, the American hub of Virginia has about 38,000 megawatts of capacity live or in planning.
The industry rule of thumb is $10 million a megawatt—so a $5 billion investment for Sinha. He thinks Indosat’s Indonesian economics can reduce the cost to 70% of that.
Potential clients include Indonesian customers and American tech giants, who outside the U.S. often use local partners instead of building their own facilities.
Sinha said Indonesia’s data-center boom would supercharge the economy and boost the tech talent pool. Other experts are less certain.
After construction, each megawatt of a data center supports about only one permanent job, said James Murphy, Asia-Pacific managing director of DC Byte. And even if built in developing nations, many data centers remain foreign-owned.
“The ultimate beneficiaries are the large tech companies and their investors,” said Govand Azeez, a political economist at Sydney’s Macquarie University who researches tech sovereignty in Southeast Asia.
Write to Stu Woo at Stu.Woo@wsj.com |
