New Delhi: Nvidia is spending $1.5 billion on SB Energy, a SoftBank-backed company that is building an AI data center in Ohio for OpenAI. The deal is part of a much bigger initiative to construct the computing system essential for the speedy expansion of AI services.
The Ohio project is still under development in Pike County, and will eventually deliver up to 8 gigawatts of computing horsepower. It will be in operation by 2028 with the first 800MW of capacity available. The data center will be built and operated by SB Energy, and leased to OpenAI for 20 years.
Under the terms of the agreement, Nvidia also promises a $105 billion guarantee to cover OpenAI’s lease and other expenses of the project. It is not a guarantee that Nvidia will pay the entire cost of the data center. Rather, it is meant to offer financial aid for aspects like lease payments, power costs, in addition to the worth of property.
The project highlights the rapid rise of the need for AI computing. Highly complex AI models require tremendous computational resources, a necessity that companies like OpenAI cannot afford. This means the need for massive data centers, Nvidia graphics processing units and a company’s own power supply.
The Ohio plant will also be primarily powered by Nvidia chips. This will give the chipmaker a close relationship with the developer of the data center and OpenAI. Nvidia’s investment in SB Energy could assist in ensuring long-term demand for its AI chips as well as the infrastructure required to use them.
But the deal has also spurred debate on what has become a contentious notion in the AI sector: “circular financing.” Nvidia is building infrastructure to power its chips, and OpenAI will pay for that capacity. This equates to the flow of capital amongst highly interconnected businesses within the larger AI ecosystem. In a previous talk, Nvidia CEO Jensen Huang stated that the need for AI computing will continue to be strong, which is why the company is investing in infrastructure.
The Ohio project will also be expected to have a broader economic impact. It could generate approximately 35,000 construction work and approximately 2,500 permanent jobs. The development should involve significant capital and energy/power investments, including billions of dollars for upgrading the grid.
The new deal marks a larger than usual shift in the tech industry. The era of software and models is no longer the era of AI. Now, enterprises are clamoring for chips, land, power and data centers, in large numbers. So much so that Nvidia has invested in SB Energy, which owns this physical infrastructure.
