NEXTDC & OpenAI Announce A$7B Sydney AI Data Centre | 550MW Hyperscale Project Revealed

Big Announcement

Australian data-centre operator NEXTDC has signed a non-binding Memorandum of Understanding (MoU) with OpenAI to jointly develop a hyperscale AI campus and GPU “supercluster” on NEXTDC’s S7 site in Western Sydney.
The project is part of OpenAI’s new initiative OpenAI for Australia — the first of its kind in the Asia-Pacific region — aimed at building sovereign, high-performance AI infrastructure locally.

Site & Scale: What Is S7

• The facility will be built at NEXTDC’s S7 campus in Eastern Creek, Sydney — about 45 km west of Sydney’s central business district.
• The S7 site spans roughly 258,000 square metres of developable land.
• NEXTDC acquired this land in October 2024 for about A$353 million (≈ US$233.4 million).
• The planned power/IT capacity for the campus is up to 550 megawatts (MW).

These specifications make S7 one of the largest AI-ready data-centre projects planned in Australia, potentially serving high-intensity AI workloads.

💰 Investment & Economic Significance

• The total build-out cost is estimated at around A$7 billion — roughly US$4.6 billion.
• For NEXTDC, the addition of this project comes alongside a recent upward revision in its FY2026 capital-expenditure (capex) guidance — an increase of A$400 million, bringing the range to A$2.2–2.4 billion.
• According to the government of NSW Government, the project bolsters the state’s push to become a global hub for tech and innovation, reinforcing Sydney’s position in data infrastructure and AI.

The broader economic impact could include thousands of jobs during construction and a long-term boost to local digital infrastructure, engineering, and AI-skill ecosystems.

🧑‍💻 What It Means: Sovereign AI Infrastructure & Data Governance

Under the partnership:

• NEXTDC will plan, build and operate the campus; OpenAI intends to act as the initial anchor customer.
• The facility is being designed to meet Australia’s “SOCI” — Security of Critical Infrastructure — standards for resilience and data governance.
• It will feature advanced infrastructure: including liquid-cooled, high-density GPU clusters, engineered for efficiency, security and long-term AI workloads.
• This is pitched as “sovereign infrastructure”: meaning Australian businesses, government agencies, and research institutions can run AI workloads locally — with lower latency, compliance with local data laws, and potentially enhanced data privacy.

⚠️ Challenges & Uncertainties

While the MoU marks a major milestone, several factors remain uncertain:

• The agreement is non-binding — detailed commercial terms, financing structure (including whether partners or third-party investors will be involved), and timelines have yet to be finalised.
• Build-out will take time: the initial phase is expected to be delivered in the second half of 2027.
• Operational costs — especially power consumption for a high-density AI campus — could be substantial; energy requirements and sustainability will likely draw scrutiny. (Some reporting outside major outlets notes “power costs” and “data-centre energy demand” as potential issues.)

📰 Broader Implications: For Australia & Asia-Pacific AI Landscape

• The project represents one of the most ambitious AI infrastructure investments in Australia to date, indicating serious commitment to domestic AI capacity rather than relying solely on overseas cloud providers.
• It could accelerate AI adoption across enterprises, government, research and education sectors by offering high-performance, locally hosted compute capacity.
• For the region (Asia Pacific), it sets a potential template for building sovereign, scalable, and secure AI infrastructure — perhaps inspiring similar efforts in other countries.

✅ Conclusion

The NEXTDC–OpenAI partnership to build a 550 MW, A$7 billion hyperscale AI campus at Eastern Creek signals a major shift in the AI infrastructure landscape — not just in Australia, but globally. If successfully built and operated, the S7 campus could offer local institutions a secure, compliant, high-performance environment for AI workloads, reinforce Sydney’s standing as a tech and digital-infrastructure hub, and accelerate broader AI adoption across sectors.

However, significant execution challenges remain — from financing and energy management to regulatory compliance and long-term sustainability. The coming months and years will be critical in turning this ambitious plan into a functioning hub.