‘Phenomenal’ amount of capital going into AI could be more spread out: Temasek CEO

‘Phenomenal’ amount of capital going into AI could be more spread out: Temasek CEO Temasek's Dilhan Pillay Sandrasegaran and DBS' Tan Su Shan spoke at the Forbes Global CEO Conference, where American billionaire investor Ray Dalio also warned of a "classic bubble". SINGAPORE: With a “phenomenal” amount of money going into artificial intelligence, the capital could be spread more widely to areas such as AI adoption, Temasek Holdings CEO Dilhan Pillay Sandrasegaran said on Wednesday (Oct 7). Speaking on a panel at the Forbes Global CEO Conference, the head of Singapore's sovereign wealth fund said much of the money is flowing into chips and infrastructure. The panel included billionaire Ray Dalio, Franklin Templeton CEO Jenny Johnson and Bangkok Bank president Chartsiri Sophonpanich. Mr Sandrasegaran questioned whether the cost of capital will rise because of inflationary pressures from investment in AI infrastructure. “So much (is) moving into AI infrastructure and so on that we have to start thinking now about how much capital is available for the adoption going forward,” he said. Temasek is considering this now because its companies need to borrow for their operations, transformation and AI adoption, he said. Capital is flowing into the five layers laid out by Nvidia CEO Jensen Huang: energy, chips, infrastructure, models and applications, said Mr Sandrasegaran. Much of the profit pool has gone to the chip sector. “The memory chip guys are making a bundle now compared to any time in the history of semiconductors,” he said. He also addressed the decision by ST Telemedia, a Temasek subsidiary, to sell its 82 per cent stake in ST Telemedia Global Data Centres to investment firm KKR and Singtel for S$6.6 billion (US$5.16 billion). “People asked me, ‘Why would you want to sell a data centre operator when all that money is going to AI right now?’” said Mr Sandrasegaran. The subsidiary relied on Temasek's triple-A rating to get good credit at good rates, he said, adding that costs would have risen had it continued to invest in energy capacity or better technology for its data centres. “You have to think about the morning after when you're the owner of a business, and then your risk tolerance level is different from that of an investor, because the ability to rotate is not the same,” he added. EXPERIMENTATION AND TRUST IN AI ADOPTION On a later panel, DBS Group CEO Tan Su Shan discussed how companies can encourage AI adoption. The panel, which covered the growth of technology amid geopolitical and workforce changes, included Northeastern University president Joseph E Aoun, Singapore Exchange chairman Koh Boon Hwee, Trip.com Group CEO Jane Sun and SM Investments vice-chairperson Teresita Sy-Coson. One way to drive AI adoption is to allow experimentation and failure in a safe environment, said Ms Tan. DBS gives employees a safe space grounded in enterprise knowledge, with controls and governance policies, to build their own AI agents, she added. When she took the helm of the bank, she challenged teams to come up with the best AI agent others could use, and units to create “big, massive operating model transformation changes”. Ms Tan also highlighted the importance of data governance and accountability, given the large volume of existing legacy data and new data created every day. Ownership of the data lifecycle is often unclear, and the way data is tagged, stored and used will have to change, she said. “So first of all, it's really creating a foundation of making sure that your end-to-end data, from the day it's born to the day it's purged, you have clear ownership, accountability and you know where it sits. And then a rubric around how you deal with structured data and unstructured data,” she said. A firm's culture is another factor, said Ms Tan. It must stay focused on doing the right thing for the customer rather than just optimising profits. Protecting people in the face of job transformations must also be considered, she said. “For us, we have a rhetoric that says we're here not to protect jobs, we're here to protect people,” she said, adding that employees need the right attitude to harness AI and move up the productivity ladder. For instance, someone in operations whose role disappears can look at becoming an AI agent manager – the human in the loop who watches the AI agents as they operate, she said. DALIO WARNS OF 'CLASSIC BUBBLE' Mr Dalio told the audience that AI is a "classic bubble" close to bursting. The market is at a stage of the cycle where rising interest rates and changing circumstances have yet to hurt other assets, he said. The bubble starts to pop when rates keep climbing, said Mr Dalio, who has long warned of an AI bubble. His comments come as PWC analysts predicted that global data centre spending will reach US$31.6 trillion by 2050 to meet the growing appetite for AI. That is more than the United States’ gross domestic product of US$30 trillion. Overinvestment often accompanies big technological advancements, said Franklin Templeton's Ms Johnson. “What we’re talking about with the bubble is in these hyperscalers who are deploying a huge amount of capital, raising a ton of debt,” she said. She stressed that all projections of the energy these investments will need are based on today's technology. Long-term commitments built on those projections are therefore "a little bit more hazardous" amid rapid innovation, she said.