Impetus for Sovereign Cloud Deployments Will Accelerate, Driven by Cloud Providers and Telco Sovereign AI Partnerships

NVIDIA recently announced several sovereign Artificial Intelligence (AI) partnerships deepening its presence in Japan and Indonesia with partnerships with local telecommunications operators. SoftBank, a cloud and telco services provider, uses NVIDIA’s Blackwell platform to build supercomputers, using NVIDIA AI infrastructure to research and develop Japanese Large Language Models (LLMs). Cloud provider HIGHRESO is building a dedicated AI data center, powered by NVIDIA’s accelerated computing solutions.

The Indonesian government is working with NVIDIA to bring sovereign AI to Indonesia, launching a collection of LLMs and AI services built with NVIDIA NeMo and NIM microservices, serving more than 277 million local language speakers. Built by Indonesians, for Indonesians, Sahabat-AI is a collection of open-source Indonesian LLMs that local enterprises and government agencies can use to create Generative Artificial Intelligence (Gen AI) applications that can understand Bahasa Indonesia and the local context. Lintasarta, a subsidiary of Ooredoo Hutchinson, built an NVIDIA-accelerated sovereign AI cloud, driving transformation across energy, financial services, healthcare, and other industries.

Telenor launched its AI factory, using NVIDIA’s full-stack AI computing platform, to enhance AI adoption for internal operations and provide AI solutions to customers. Hive Autonomy, a Norwegian autonomous technology provider, is the first customer of Telenor’s AI factory. Hive Autonomy intends to leverage the AI factory to drive significant advancements in autonomous solutions, enhancing safety, efficiency, and reliability. The AI factory combines Telenor’s infrastructure expertise with partner enterprises to accelerate the adoption of enterprise AI in Norway.

The rise of sovereign AI will significantly influence the development and adoption of sovereign clouds, particularly in regions such as Asia-Pacific where there is a continuous emphasis on data sovereignty, and in Europe, with the new EU AI act being the first comprehensive regulation on AI by a major regulator. One of the primary objectives of the EU AI Act is to protect personal data and enhance data sovereignty, a key area where the sovereign cloud can help facilitate compliance by providing localized environments where data can be stored and processed according to European Union (EU) laws.

Several major cloud hyperscalers have announced significant investments in sovereign cloud solutions, reflecting the increasing demand for data sovereignty and compliance with local regulations. Amazon Web Services (AWS) announced a €7.8 billion investment in its European sovereign cloud, specifically in Brandenburg, Germany, which will be rolled out through 2040 to launch the first AWS Sovereign Cloud region by the end of 2025. Oracle has launched two sovereign cloud regions in Frankfurt, Germany, and Madrid, Spain. These regions are designed to comply with local governance and regulatory requirements, and enhance data sovereignty compliance for European customers. In France, Microsoft Azure is collaborating with local partners Orange and Capgemini to offer Azure cloud services through a French-owned cloud company called Bleu, with the intent of providing sovereign cloud solutions tailored for the French enterprise market.

Several areas where sovereign AI and sovereign cloud will have the most meaningful impact include:

• Emergence of “National” LLMs: The rise of Gen AI has put LLMs in the spotlight. Increasingly, the development of national LLMs is gaining traction as governments recognize the potential harm in relying on foreign-developed LLMs that can be susceptible to risks such as exposure of sensitive data, security vulnerabilities, and foreign influence. Sovereign cloud providers and relevant government agencies can work together to develop national LLMs, leveraging sovereign AI capabilities for AI model training with the secure data privacy and governance provided by a sovereign cloud platform.
• Healthcare Interoperability: National healthcare providers often have siloed information and clinical solutions that are not connected, leading to inefficiency and waste. Sovereign cloud solutions can be used to enhance interoperability and integration among medical devices and data systems, while complying with local data protection laws. The National Health Service (NHS) in the United Kingdom uses sovereign cloud solutions to facilitate integration across various healthcare systems and devices used within the NHS, with all data processes stored within their cloud infrastructure remaining within the United Kingdom, ensuring compliance with local laws.
• Telco Infrastructure Capabilities: Telco operators possess extensive networks and data center capabilities that can be leveraged to support localized sovereign cloud initiatives. For example, Singtel in Singapore is establishing energy-efficient data centers in Southeast Asia that serve as AI factories. Cloud providers can leverage these by providing an additional layer of data privacy and digital sovereignty from sovereign cloud solutions to enterprises that use these AI data centers.

As the demand for sovereign cloud AI solutions accelerates, sovereign cloud providers will have to enhance enterprise AI innovation and diversify service offerings. To drive these strategic imperatives, sovereign cloud providers must focus on these areas:

• Infrastructure Co-Development with Telcos: As mentioned before, cloud providers are investing heavily in building sovereign cloud infrastructure to cater to the demand for sovereign cloud deployments, while telco operators inherently have a large footprint of existing data centers that can be leveraged to support sovereign AI applications. Telco operators also have extensive network capabilities that can be used to deploy sovereign cloud services. By co-developing and pooling resources, sovereign cloud providers can focus on building enterprise AI applications hosted on secure and sovereign data centers.
• Industry Specialized AI Infrastructure: Sovereign cloud providers offering specialized industry sovereign AI solutions will further accelerate the deployment of sovereign cloud solutions, especially in healthcare and life sciences; for example, by packaging NIM solutions with NVIDIA Graphics Processing Units (GPUs) as part of a sovereign AI healthcare solution. NIMs enable developers to access a library of AI models through Application Programming Interfaces (APIs). This library includes foundation models for drug discovery, medical imaging, and genomics. A packaged healthcare AI platform can be a valuable differentiator against other sovereign cloud providers.
• AI Partnerships and Acquisitions: To ensure rapid adoption of sovereign cloud solutions, cloud providers must be able to demonstrate the ability to localize cloud AI applications according to specific national context. This will require partnerships with relevant government agencies or the acquisition of AI startups. Singapore’s GovTech is using AWS’ Dedicated Local Zone to meet stringent data isolation and security requirements, while at the same time acquiring Perceive, a company specializing in AI model compression and edge computing technologies. This acquisition extends AWS’ capabilities in deploying sovereign AI solutions on edge devices, improving performance and efficiency for applications that require real-time processing.

ABI Research forecasts that sovereign cloud deployments will accelerate in 2025, driven by sovereign AI initiatives, particularly as cloud hyperscalers recognize that data sovereignty and security considerations will drive most AI investments. As enterprise AI services move beyond the Proof of Concept (POC) stage to production, cloud providers should work with telco operators to target enterprises that are looking to deploy enterprise AI use cases such as Natural Language Processing (NLP) for better customer experience and integration of medical devices and patient information in healthcare, use cases that deal with a huge amount of personal and sensitive data, all of which will need to be stored, processed, and accessed securely, making the sovereign cloud the ideal platform of choice.