OpenAI to Collaborate with Major Tech Giants
The day after securing a $100 billion investment from Nvidia, a chipmaker, OpenAI announced it had finalized agreements with two additional tech giants to construct five new data centers throughout the United States.
OpenAI, an AI startup, announced that it will collaborate with Japanese conglomerate SoftBank and cloud computing firm Oracle to establish computing facilities in Lordstown, Ohio; Milam County, Texas; Shackelford, Texas; Doña Ana County, New Mexico; and an undisclosed location in the Midwest.
The new data centers are a component of a strategy that the three companies presented in January alongside President Donald Trump at the White House. As part of the Stargate Project, the companies plan to invest $500 billion in new facilities for developing AI technologies and providing them to consumers and businesses.
In Tuesday's announcement, OpenAI stated it has secured agreements to construct over $400 billion in data center infrastructure. It needs to secure further agreements to attain its target of $500 billion.
Oracle will fund and manage the building of three new data centers. OpenAI will subsequently acquire computing resources from Oracle. Clay Magouyrk, Oracle's co-chief executive, stated that the cloud computing giant plans to finance the construction of these facilities in part by seeking new types of financial agreements with different partners, technology suppliers, and other investors.
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"It involves collaborating with the right partners and providers to leverage their capital, along with innovative corporate structures and unique financing methods," he stated.
SoftBank plans to finance its two locations in Ohio and Milam County, Texas, by securing funds from banks and incurring debt, as reported by a source familiar with the deal who requested to remain unnamed. OpenAI will manage the building process.
The declaration is part of a broader initiative among technology firms to establish data centers for AI globally. OpenAI, Amazon, Google, Meta, and Microsoft intend to invest over $325 billion collectively in these facilities by year-end. OpenAI's endeavors got a boost on Monday, as Nvidia announced it plans to invest $100 billion in the company over the coming years.
The Nvidia agreement served as another instance of OpenAI securing funding from the tech giants it depends on for its products and services. Microsoft, having invested over $13 billion in OpenAI between 2019 and 2023, earned billions after the startup compensated it for the computing resources required to create and provide AI technologies such as the chatbot ChatGPT.
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Nvidia has invested $10 billion initially at OpenAI's valuation of $500 billion. This provides Nvidia with an approximate 2 percent ownership in the startup. The semiconductor manufacturer intends to make nine more $10 billion investments as OpenAI advances the construction of data centers with its collaborators.
Many experts worry that companies like OpenAI could shoulder enormous debts if AI technologies are not adopted as quickly as the companies believe they will be. Though OpenAI is pulling in billions of dollars in revenue, it is spending tens of billions more, mostly on computing power.
As part of the Stargate Project, OpenAI and Oracle are already building a data centre in Abilene, Texas, which the companies showed off to a group of reporters Tuesday. The companies plan to build eight data centres that consume about 1.4 gigawatt of electricity, enough to power hundreds of thousands of homes.
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OpenAI also plans to build a computing facility in the United Arab Emirates, following an agreement between the Trump administration and the Persian Gulf nation. That data centre is part of a venture with Oracle, SoftBank, the UAE artificial intelligence firm G42 and others.