Stargate artificial intelligence project to exclusively serve OpenAI

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Stargate, a high-profile artificial intelligence infrastructure project floated by Donald Trump this week, will exclusively serve ChatGPT maker OpenAI, according to people familiar with the matter.

The initiative planned to spend $100 billion Big Tech infrastructure projects, that number will grow to $500 billion over the next four years, OpenAI and SoftBank, two of Stargate’s main backers, said on Tuesday. Oracle and Abu Dhabi State AI Fund MGX are also founding partners.

Trump lauded the SoftBank-backed initiative OpenAI chief Sam Altman and other tech officials attended a White House event Tuesday as “a great declaration of confidence in America’s prospects under a new president.”

Despite flashy announcements, Stargate has yet to secure the funding it needs, will receive no government funding, and will only serve OpenAI Once completed, people familiar with the initiative said.

“The goal is not to become a data center provider for the world, it’s for OpenAI,” one person said.

Another person close to the project said it was far from a fully developed plan: “They didn’t find the structure, they didn’t find the financing, they didn’t have the money promised.”

SoftBank and OpenAI each intend to raise more than $15 billion for the project. The companies hope to raise a combination of equity from their existing backers and debt, which will be used to fund Stargate. Tokyo-based SoftBank will also inject existing funds into Stargate, according to one of the people.

OpenAI and SoftBank declined to comment.

Altman has worked for more than a year to expand OpenAI’s access to data and computing power, arguing that if the company is to achieve its goal of creating AI capable of surpassing humans across most cognitive skills, a hurdle must be overcome to move them into the workforce. have to do and pushing the boundaries of scientific research.

That means looking beyond OpenAI’s exclusive relationship with Microsoft. The group, which has invested $13 billion in OpenAI and owns about half of the profits from the start-up’s for-profit subsidiary, is providing Stargate with technical support, but not capital.

Microsoft launched its own $30 billion AI infrastructure fund with fund manager BlackRock in September last year, and Chief Executive Satya Nadella said on Wednesday that his company would spend $80 billion on infrastructure this year, separate from Stargate.

Altman had been talking to SoftBank chair Masayoshi Putra for two years about AI projects, including one New AI deviceAccording to people familiar with the negotiations.

SoftBank also invested in OpenAI during a $6.6 billion fundraising in October, valuing the start-up at $157 billion, and the Financial Times reported the Japanese group Plan to buy an extra The company stocked $1.5 billion in November. Sons and Altman began detailed discussions on Stargate months before this week’s announcement, according to two people with direct knowledge of the matter.

Although Altman’s infrastructure plan had been in the works for more than a year, “the idea of ​​announcing it at the White House was not working. [as long]”, according to a person with knowledge of the project.

“There is a real intention to do this, but the details have not been worked out,” said another person involved in the project. “People want to do splashy things in Trump’s first week in office.”

Stargate is incorporated in Delaware, where OpenAI, SoftBank, Oracle and MGX each have stakes in the company. The group will appoint an independent chief executive and board, according to people with knowledge of the plans.

The company will be split into an operational unit, tasked with building and managing data centers led by OpenAI, and a unit responsible for raising capital, led by SoftBank, a person familiar with the project said.

A first facility in Abilene, Texas is already underway.

Data center start-up Crusoe is building that facility for Oracle starting in June 2023. Crusoe secured $3.4 billion in financing from Blue Owl in October to finance its development. Oracle is expected to buy about $7 billion worth of chips to power the Texas site and provide the computing power to Microsoft, which it will use to power OpenAI.

Additional reporting by David Keohane in Tokyo and Stephen Morris in Davos