The real AI race is shifting from algorithms to infrastructure. Multi‑gigawatt data centres, reliable power and secure subsea cables now shape who captures value and who carries risk. Australia is an attractive Asia‑Pacific data‑centre market, but grid constraints and fragmented governance threaten its ambition to be a trusted Indo‑Pacific AI hub rather than a peripheral server‑farm landlord.

Australia’s next wave of innovation will depend on how clearly policy separates generic data centres from high‑performance computing (HPC). Bundling them into one “digital infrastructure” bucket directs capital to cloud‑style capacity while underinvesting in leadership‑class HPC needed for frontier AI, climate modelling, defence and advanced industry. The piece argues for explicit “AI‑ready HPC” and “AI‑capable cloud” tracks in national strategy, funding and governance.