The closure of the Strait of Hormuz has thrown users of Middle Eastern oil for a loop. Relying on a single region for a critical commodity, as is more or less inevitable when it comes to fossil fuels, is a huge risk. But what if the commodity in question were not oil, but data?
This is a question governments have been wrestling with for some time. It gets an extra sense of urgency from the crisis unfolding in the Middle East. The popular answer is “sovereign AI” — the governmental goal of securing a domestic base of servers, data centres and the stuff that goes in them, including even the AI models themselves. For companies, this is potentially a large profit opportunity.
McKinsey reckons sovereign AI could account for $600bn of annual spending by 2030, sped by local regulation on data handling, and a general desire to be less dependent on the US. Of that sum, about half comes from infrastructure and “compute”. Big spenders such as Google and Microsoft tend to say that two-thirds of physical capital expenditure goes on chips, servers and networking, which suggests a prize of perhaps $400bn.