CDC Data Centers has walked away from a partnership with Firmus that once promised AU$73 billion (US$50.7 billion) of investment in Australian AI infrastructure, delivering just 42MW of capacity from a planned 1.6GW buildout after 12 months.

What did Project Southgate actually build?

Project Southgate launched in October 2025 as a three-way alliance between Firmus, CDC Data Centers and Nvidia. The partners framed it as a national rollout of Firmus's "AI factories" hosted on CDC's Australian data center infrastructure, targeting 1.6GW of operational capacity by 2028.

Twelve months on, the partnership delivered a single facility: 42MW of capacity inside a CDC site in Melbourne. That figure amounts to roughly 2.6% of the 2028 target and underscores how far the original ambition remains from reality.

Why is CDC exiting now?

CDC CEO Greg Boorer told financial news site Rampart: "We're certainly not planning on doing 1.6GW of rollout with them because they made other choices regarding doing their own data center developments, which is slightly different to what we envisaged."

Firmus Co-CEO and cofounder Oliver Curtis said the two sides had "mutually agreed earlier this year" to end the partnership, according to W.Media. He stressed the split does not affect Firmus's own development pipeline.

The trigger, according to both companies' statements, was a string of independent deals Firmus signed over the past four months — none of which involved its Australian partner. CDC concluded those moves no longer aligned with the shared rollout plan.

Where is Firmus heading instead?

Firmus has assembled an Asia-Pacific portfolio that now sits outside CDC. The reported projects include:

• A 360MW Nvidia-backed data center on Batam Island, Indonesia
• Two Malaysian sites earmarked for OpenAI workloads
• Two further developments in South Australia
• A planned subsea cable linking the Australian mainland to Tasmania with partner Subco

The geographic spread signals a strategic pivot from a CDC-anchored Australian buildout to a region-wide play spanning Southeast Asia, domestic Australia and a new submarine link.

What is the financial fallout?

Firmus now plans to cut its pending IPO price from AU$11 to AU$9 per share, according to Australian media. The earlier range implied an enterprise value near AU$44 billion (US$30.6 billion); the revised figure reflects weak investor demand and concerns about mostly unbuilt capacity.

Ten Cap portfolio manager Jun Bei Liu told ABC News the company's disclosure record was without precedent in its thinness, criticizing the gap between announced and commissioned capacity — a gap the failed CDC partnership now widens further.

CDC, 49.7% owned by listed New Zealand and Australian infrastructure investor Infratil, absorbed a valuation hit of its own. Infratil's third-quarter independent valuation of CDC dropped A$45 million (US$31.3 million), from AU$9.21 billion (US$6.4 billion) to AU$9.17 billion (US$6.37 billion). Infratil cited higher interest costs following a series of Reserve Bank of Australia rate rises this year.

Infratil's ASX-listed shares slipped 0.72% on Wednesday. The group also owns New Zealand mobile operator One NZ, a connection that may matter if AI data center capacity becomes a downstream telco-edge play.

What happens next?

CDC retains its Australian data center footprint and Infratil-backed balance sheet, but rising Australian rates have lifted its cost of capital at the same time the firm needs capital to compete for hyperscale tenants. Firmus retains its Asian pipeline yet enters its IPO with a smaller valuation, reduced partner support and an analyst-driven disclosure critique ringing in its ears. Project Southgate's collapse leaves Nvidia's Australian AI factory ambitions dependent on whether Firmus can commission capacity at speed — and whether the lowered IPO price still attracts enough demand to fund the 2028 target.