Latest / The Front / Will the Firmus flop kill our hyperscaler future?

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Will the Firmus flop kill our hyperscaler future? · The Front

• 0:03
  Speaker 1: From The Australian, here's what's on the front.
• 0:05
  Speaker 2: I'm Claire Harvey.
• 0:06
  Speaker 1: It's Tuesday, October 13, 2026. Firmus is a giant flop.
• 0:14
  Speaker 1: So what happens now to the tens of billions of
• 0:17
  Speaker 1: dollars in AI hyperscaler money flooding into Australia to fund
• 0:21
  Speaker 1: data centres? As markets and politicians reel from the collapse
• 0:25
  Speaker 1: of Firmus' much-vaunted attempt to float... I'm joined in just
• 0:30
  Speaker 1: a moment by the journo following every move, Perry Williams.
• 0:37
  Speaker 3: Artificial intelligence giant Anthropic has signed a long-term lease to
• 0:42
  Speaker 3: set up shop in an Australian data centre.
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  Speaker 2: They will invest more than 680 billion US in digital
• 0:47
  Speaker 2: infrastructure and AI.
• 0:49
  Speaker 3: Worth an estimated $ 30 billion.
• 0:52
  Speaker 1: The developer says it won't use drinking water to operate.
• 0:57
  Speaker 1: Perry Williams is the Australian's chief business correspondent. Perry, we
• 1:01
  Speaker 1: talk a lot about data centres and it all seems,
• 1:04
  Speaker 1: I think, to many Australians like this is something in
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  Speaker 1: the future. One day we'll have data centres on every
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  Speaker 1: corner and.
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  Speaker 2: Life will be great.
• 1:11
  Speaker 1: But actually, there is massive investment right now in hyperscalers
• 1:16
  Speaker 1: in Australia. Can you tell me, first of all, what
• 1:18
  Speaker 1: is a hyperscaler and what are they investing in? There's
• 1:21
  Speaker 1: billions of dollars coming into our economy. Who from?
• 1:25
  Speaker 2: It's a pretty amazing story, actually. Yeah, the hyperscalers are
• 1:28
  Speaker 2: this term that's basically given to the likes of Meta,
• 1:34
  Speaker 2: the owner of Facebook, Anthropic, Amazon, Google, of course. These
• 1:39
  Speaker 2: sorts of big companies that are needing massive computing power,
• 1:43
  Speaker 2: but also for these AI chips. So pretty much any
• 1:48
  Speaker 2: big tech company has a huge... investment drive to try
• 1:54
  Speaker 2: and fulfill demand for all these AI chips. And what
• 1:58
  Speaker 2: these hyperscalers aren't in the business of is building these
• 2:03
  Speaker 2: facilities themselves. So they're looking for locations, but they're also
• 2:07
  Speaker 2: looking for companies to help them out as part of
• 2:10
  Speaker 2: this incredible kind of AI boom.
• 2:13
  Speaker 1: But one of the things we know about Australia is
• 2:14
  Speaker 1: that property is very expensive, that regulation is a nightmare.
• 2:18
  Speaker 1: Getting anything approved is very difficult from local to state
• 2:21
  Speaker 1: to the Commonwealth government. Why Australia?
• 2:24
  Speaker 2: Yeah, there's a few attractions if you listen to the hyperscalers.
• 2:28
  Speaker 2: It's actually everything from the Five Eyes security agreement. Australia
• 2:33
  Speaker 2: is seen as a very stable jurisdiction, obviously close ties
• 2:37
  Speaker 2: with the US. And Look, it's a high-cost place to operate,
• 2:43
  Speaker 2: but I think you can also get things done here
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  Speaker 2: quite quickly. Probably what we've started to see over in
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  Speaker 2: the US is states over there are really fragmenting in
• 2:55
  Speaker 2: terms of their support for data centres and actually different
• 2:59
  Speaker 2: sides of politics getting quite contested on US data centres.
• 3:04
  Speaker 2: So Australia, look, there are some hurdles here, but it's
• 3:08
  Speaker 2: quite an attractive destination.
• 3:16
  Speaker 1: You're a former energy reporter at The Australian, among one
• 3:19
  Speaker 1: of your many areas of expertise. So you know better
• 3:21
  Speaker 1: than anyone that we still don't have consensus in Australia
• 3:24
  Speaker 1: about things like wind farms or about the transmission lines
• 3:27
  Speaker 1: that we need to bring the energy from renewable energy
• 3:31
  Speaker 1: zones into the cities where people need to use it.
• 3:34
  Speaker 1: How are we ever going to get agreement on where
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  Speaker 1: to put data centres and get communities to sign up
• 3:38
  Speaker 1: to these when they can't even agree about some windmills?
• 3:42
  Speaker 2: I think the data center industry is looking at this
• 3:45
  Speaker 2: and thinking, okay, what are the lessons we can learn?
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  Speaker 2: But also, they're probably, to be honest, getting a bit
• 3:52
  Speaker 2: freaked out by the huge battle that they're going to
• 3:55
  Speaker 2: have to wage with communities. We've already seen, got a
• 3:59
  Speaker 2: lot of press. There was one in Lane Cove here
• 4:01
  Speaker 2: in Sydney, which got cancelled recently. There's a couple of
• 4:04
  Speaker 2: others here. that are up in the air. You know,
• 4:06
  Speaker 2: you're seeing communities start to sort of unite and have
• 4:10
  Speaker 2: campaigns against some of these data centres. So I think
• 4:14
  Speaker 2: they've probably underestimated just how big the challenge is.
• 4:19
  Speaker 3: It was touted as the biggest ASX float in decades,
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  Speaker 3: but all the fanfare that surrounded data centre start-up Thermos
• 4:27
  Speaker 3: and its multi-billion dollar share market listing amounted to zip.
• 4:32
  Speaker 1: Let's talk about Firmus. This is the big business story
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  Speaker 1: of the moment. The data centre building company, which was
• 4:38
  Speaker 1: going to release prospectus to investors this week ahead of
• 4:42
  Speaker 1: a float later in October, was going to be the
• 4:44
  Speaker 1: biggest float on the Australian Stock Exchange since Telstra in
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  Speaker 1: 1997 with a kind of mooted valuation of $ 44 billion.
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  Speaker 1: Then the big investors freaked out, the super funds, the banks.
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  Speaker 1: They said, no, this is not worth the money that
• 4:57
  Speaker 1: it's claiming to be. And they've pulled the float. So
• 5:01
  Speaker 1: now Firmus' founders are scrambling to make another plan. Oliver
• 5:06
  Speaker 1: Curtis spoke to the Australians, Liam Mendes in Singapore, and
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  Speaker 1: kind of accused Australia of not being interested in this big,
• 5:13
  Speaker 1: exciting new tech story. He would say that to a
• 5:16
  Speaker 1: certain extent because this is his big dream. What do
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  Speaker 1: you think about that, though? Is that a fair enough
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  Speaker 1: criticism that Australia is too cautious or that we're applying
• 5:25
  Speaker 1: kind of old-fashioned values to this exciting new industry where
• 5:28
  Speaker 1: we should be a bit more open?
• 5:30
  Speaker 2: In a word, no. I applaud what Oliver Curtis is
• 5:32
  Speaker 2: trying to do. I think a lot of people think, great,
• 5:35
  Speaker 2: he's giving it a go. He's got backing from some
• 5:39
  Speaker 2: of the world's biggest hyperscalers, NVIDIA. the world's most valuable company,
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  Speaker 2: as an investor. So there's plenty to admire about the
• 5:47
  Speaker 2: firm's story, but I think to blame it on Australians
• 5:52
  Speaker 2: not sort of backing startups or an argument along those
• 5:55
  Speaker 2: lines is completely off the mark. I think the media analysts,
• 5:59
  Speaker 2: fund managers were asking quite pertinent questions about the business case.
• 6:05
  Speaker 2: I think there is a real business there, but I
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  Speaker 2: think the reason it fell apart is just the valuation issue.
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  Speaker 2: was all out of whack with what these guys have
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  Speaker 2: actually built, you know, literally sort of tens of millions
• 6:19
  Speaker 2: in revenue and trying to command a $ 44 billion valuation.
• 6:23
  Speaker 2: And that does happen in the tech scene, but I
• 6:27
  Speaker 2: think Australia just took quite a critical look at it.
• 6:29
  Speaker 2: And I think they probably still could have got the
• 6:32
  Speaker 2: IPO away if the brought that valuation down a bit,
• 6:37
  Speaker 2: sold the shares at a slightly lower amount, they may
• 6:40
  Speaker 2: still have been able to get the IPO away. October 23rd,
• 6:43
  Speaker 2: it was going to be. We heard from investors they're
• 6:46
  Speaker 2: probably being a bit too greedy. And it is hard
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  Speaker 2: to escape that conclusion that the bankers were there, everyone
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  Speaker 2: was getting in behind this, just seemed to have this
• 6:55
  Speaker 2: incredible energy behind it. And I think they will probably
• 6:59
  Speaker 2: look back and think they sort of missed a trick
• 7:01
  Speaker 2: with they should have probably stopped it a bit earlier.
• 7:04
  Speaker 2: would have floated successfully, and then they can build from there.
• 7:13
  Speaker 1: Something that I hear a lot when we're talking about
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  Speaker 1: AI and data centres is that this is the next railways,
• 7:19
  Speaker 1: this is the next industrial revolution, but we have to
• 7:23
  Speaker 1: move fast. It's all going to evaporate if Australia doesn't
• 7:26
  Speaker 1: get its act together and get on board. And the
• 7:29
  Speaker 1: AI companies like Anthropic are certainly saying if Australia doesn't
• 7:32
  Speaker 1: amend the copyright law so that we can train our
• 7:35
  Speaker 1: models here, we're just going to go look somewhere else.
• 7:38
  Speaker 1: I should disclose that News Corp Australia, which employs both
• 7:41
  Speaker 1: of us, is opposed to this and says the copyright
• 7:43
  Speaker 1: law should not be amended and that these companies, if
• 7:46
  Speaker 1: they're going to train their models on books or journalism
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  Speaker 1: or art or music, should have to pay licensing fees
• 7:52
  Speaker 1: like anyone else would have to. What do you think
• 7:56
  Speaker 1: about that sense of urgency here? you know, is it
• 7:59
  Speaker 1: right that if we don't kind of approve all these
• 8:02
  Speaker 1: data centres now and change the copyright law, that all
• 8:05
  Speaker 1: this potential investment is just going to evaporate?
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  Speaker 2: Yeah, there's a real game going on here, I think.
• 8:11
  Speaker 2: We've seen a lot of these hyperscalers come to Australia,
• 8:15
  Speaker 2: put real money down, and there's now this lure of
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  Speaker 2: multiples of hundreds of billions of dollars in extra investment
• 8:24
  Speaker 2: should they be able to do their so-called kind of
• 8:26
  Speaker 2: AI training here in Australia. Look, I think we probably
• 8:34
  Speaker 2: do need to move quite fast to capture some of
• 8:36
  Speaker 2: the industry. I think Andrew Charlton, the Assistant Technology Minister,
• 8:40
  Speaker 2: has been on the front foot about this, but the
• 8:43
  Speaker 2: Prime Minister's in a really tough spot. He's made pledges
• 8:48
  Speaker 2: on copyright, as you say.
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  Speaker 3: We need to shape it rather than allow it to
• 8:53
  Speaker 3: shape us.
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  Speaker 2: So no change to copyright law? Well, no change to
• 8:58
  Speaker 2: the principles that I've outlined very clearly. See, that's different
• 9:02
  Speaker 2: to saying no change to copyright law. What might you change?
• 9:07
  Speaker 2: He's got a really questioning electorate and community out there.
• 9:12
  Speaker 2: Do they want these data centres in their backyard? There's
• 9:15
  Speaker 2: pressure on the power grid.
• 9:16
  Speaker 1: So.
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  Speaker 2: Yeah, I think it's a really difficult one. Are these
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  Speaker 2: hyperscalers going to go off to rival countries? Possibly one
• 9:26
  Speaker 2: or two might, but I think plenty, if they have
• 9:29
  Speaker 2: an initial investment here, would be prepared to follow up.
• 9:32
  Speaker 2: Probably think we need to kind of hold our position.
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  Speaker 2: And the very reasons why these hyperscalers want to come
• 9:39
  Speaker 2: to Australia for that really stable investment environment, the rules
• 9:43
  Speaker 2: and the regulations, you probably need to see a solid
• 9:46
  Speaker 2: line in the sand. Yeah.
• 9:48
  Speaker 1: Does the Firmus story suggest, do you think that Australians,
• 9:54
  Speaker 1: whether they be mum and dad investors or giant super
• 9:56
  Speaker 1: funds or bankers or whoever, are worried about that level
• 10:01
  Speaker 1: of speed and urgency and talk of big money? Or
• 10:05
  Speaker 1: does it tell us something else?
• 10:07
  Speaker 2: Yeah, look, the big super funds in Australia quite notably
• 10:11
  Speaker 2: steered clear of the Firmus IPO. That probably gives you
• 10:16
  Speaker 2: an indication of some of the risks that they saw
• 10:20
  Speaker 2: in that IPO. Having said that, they are big investors
• 10:24
  Speaker 2: in the largest US tech players, the hyperscalers that we've
• 10:29
  Speaker 2: been talking about. So there is a real commitment by
• 10:32
  Speaker 2: Australian super funds to, I think, get behind this AI story.
• 10:37
  Speaker 2: But I think there'll be a little bit more caution
• 10:40
  Speaker 2: in the market from what's happened with Firmus. I think
• 10:44
  Speaker 2: people will look a You can have this massive pipeline,
• 10:51
  Speaker 2: but if you haven't actually got much up and running,
• 10:53
  Speaker 2: and let's face it, it could get harder and harder
• 10:57
  Speaker 2: from here to get these facilities, you know, these factories
• 11:00
  Speaker 2: up and running. So I think there'll be a little
• 11:03
  Speaker 2: bit of a reckoning. I certainly don't think it's going
• 11:05
  Speaker 2: to stop this kind of AI juggernaut by any means,
• 11:09
  Speaker 2: but probably just be a little bit more pause for thought.
• 11:15
  Speaker 1: Thanks so much, Perry.
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  Speaker 2: Thanks for having me.
• 11:22
  Speaker 1: Perry Williams is The Australian's Chief Business Correspondent. You can
• 11:26
  Speaker 1: follow all the action anytime at theaustralian.com.au.