A point of contention between OpenAI and SoftBank is reportedly the extent to which to build data centers on sites tied to SB Energy, an energy developer backed by the latter.
Even as deep-pocketed mega-cap tech companies splurge on building data centers, which handle the computational demands of artificial intelligence (AI) technology, the Stargate alliance announced by President Donald Trump immediately after his inauguration has been struggling to gain traction.
The Stargate private partnership, which envisions a $500 billion investment in building data centers nationwide, is led by Sam Altman's OpenAI and Masayoshi Son's SoftBank.
The initial key technology partners touted included Oracle, British chipmaker Arm, Nvidia, and Microsoft. Oracle CEO Safra Catz, however, said on the company’s earnings call last month that Stargate hadn’t formed yet.
A Wall Street Journal report, citing people familiar with the matter, stated late Monday that the venture had not yet secured a single deal and that the two lead players were at odds over the terms of the partnership.
After pledging a $100 billion investment in January, the project has scaled back its ambitions. It now looks to build a small data center by the end of the year, potentially in Ohio.
The report noted that aside from the Stargate partnership, SoftBank has committed to invest $30 billion in Altman’s OpenAI, the maker of the ChatGPT large language model (LLM). The bet, considered the largest ever startup investment, required SoftBank to sell assets and incur new debt.
A point of contention between OpenAI and SoftBank is reportedly the extent to which to build data centers on sites tied to SB Energy, an energy developer backed by the latter.
The report noted that Son and Altman appeared together at a SoftBank event last week, and during the event, the latter stated that they are targeting a data center buildout with 10 Gigawatts (GW) of capacity.
The companies also stated that they are working on projects in multiple states as they move at “hyperscale and speed to deliver the AI infrastructure that will power the future and serve humanity.”
Commenting on roadblocks facing the Stargate project, Tesla CEO Elon Musk, whose AI startup xAI is developing a massive data center in Memphis, reiterated his earlier skepticism about its funding.
“They simply don’t,” Musk said on X, responding to a user who shared his January post: “They don’t actually have the money.”
OpenAI, meanwhile, has been moving swiftly with its AI plans and has forged a $30 billion deal with Oracle to secure additional computational power.
Separately, an NBC report said, citing an OpenAI spokesperson, that the AI startup will open its first office in Washington, D.C., early next year. The report stated that the move may be aimed at strengthening the company’s ties with lawmakers and regulators in the national capital. The company currently functions from a coworking space in the city.
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