Stargate, a significant artificial intelligence infrastructure initiative announced by Donald Trump recently, will be developed exclusively for OpenAI, the company behind ChatGPT, as reported by insiders.
The project is projected to invest $100 billion into Big Tech infrastructure, with potential growth to $500 billion over the next four years, according to OpenAI and SoftBank, the two principal partners in the venture. Oracle and the Abu Dhabi state AI fund MGX are also involved as founding partners.
During a White House event attended by tech leaders including OpenAI’s CEO Sam Altman, Trump praised the SoftBank-backed project as a strong endorsement of America’s future under a new administration.
However, sources indicate that Stargate has not yet finalized the necessary funding, will not receive government financing, and is intended solely for OpenAI’s use upon completion. One insider clarified, “The purpose is not to serve as a global data center provider, but specifically for OpenAI.”
Another individual involved with the project revealed that plans are still quite preliminary: “They haven’t established the organizational structure, financing details, or secured committed funds.”
Both SoftBank and OpenAI aim to contribute over $15 billion each to the effort. The strategy involves attracting equity from existing investors and incurring debt to support Stargate. Additionally, SoftBank is expected to allocate existing funds for the project.
OpenAI and SoftBank have not provided any comments regarding the project at this time.
Altman has been focused on enhancing OpenAI’s access to data and computing capabilities for more than a year, identifying this as a crucial challenge to overcome for the company’s ambition of developing AI systems that can outperform humans across various cognitive domains, taking over jobs and advancing scientific research.
This approach necessitates expanding beyond OpenAI’s exclusive relationship with Microsoft, which has invested $13 billion in the company and holds nearly half of the profits from its for-profit subsidiary. While Microsoft is not providing capital for Stargate, it is offering technological support.
Microsoft recently launched a separate $30 billion AI infrastructure fund with BlackRock, and its CEO has announced plans to spend $80 billion on infrastructure in the current year, distinct from Stargate.
Regarding discussions about AI initiatives, Altman has been in talks with SoftBank’s chairman Masayoshi Son for approximately two years. SoftBank also invested in OpenAI during a $6.6 billion funding round in October, which assigned a valuation of $157 billion to the startup, and it is anticipated that the group will acquire an additional $1.5 billion in stock in the coming months.
While Altman’s infrastructure efforts had been planned for over a year, the decision to announce the initiative at the White House was not part of the original plan, according to sources familiar with the situation.
“There is genuine intent to move forward, but many details remain undefined,” noted an individual involved in the project. “People want to make significant announcements in the early days of Trump’s administration.”
Stargate is registered in Delaware, with OpenAI, SoftBank, Oracle, and MGX all holding shares. The group plans to establish an independent CEO and board.
The venture is organized into two divisions: one focused on constructing and managing data centers under OpenAI’s leadership, and the other overseeing capital raising led by SoftBank.
Construction is already underway on a facility in Abilene, Texas, managed by startup Crusoe, which has been developing the site for Oracle since June 2023. Crusoe recently secured $3.4 billion in funding to support this development. Oracle is anticipated to acquire around $7 billion worth of chips to equip the Texas facility, which will be utilized by Microsoft to support OpenAI’s operations.
photo credit: www.ft.com
