TROUBLE IN STARGATE - SoftBank + Open AI Liftoffs Delayed, Intrigues Mount
Wall Street Journal Added Commentary and Opinion
The Stargate Project, the $500 billion by 2029 effort unveiled at the White House (on the second day only of the new administration) in January to supercharge the U.S.’s artificial-intelligence ambitions has struggled to get off the ground and has now announced sharply scaled back plans.
The newly formed company has yet to complete a single data center deal.
Reportedly, SoftBank and OpenAI have been at odds over crucial terms of the partnership, including where to build the sites, according to people familiar with the matter.
Recall it was ELON MUSK who threw cold water on the bold January announcement soon after by tweeting “they don’t actually have the money.” Seems he may have been right.
The January announcement was to invest $100 billion “immediately.”
The project now sets the goal of building one small data center by the end of this year — likely in Ohio.
SoftBank committed $30 billion to OpenAI earlier this year. It is by far the largest-ever startup investment—an enormous wager that has led SoftBank to take on new debt and sell assets.
The investment was made alongside the plans for Stargate, giving SoftBank a role in the physical infrastructure needed for AI. It serves multiple purposes for SoftBank beyond AI alone.
Altman seems to have plowed ahead without SoftBank, signing deals for data centers with other operators.
One such other operator is the site in Abilene, Texas — which I reported on earlier this year. Another one is even closer to me in Denton, Texas.
The leaders of both say that all is well.
Last week in a video SoftBank event, Altman said they have an initial goal of building 10 gigawatts of data center(s) together.
A joint statement said they were advancing projects in multiple states and “moving at hyperscale and speed to deliver the AI infrastructure that will power the future and serve humanity.”
Yet the hyperscale has not been seen yet in the form of capital deployments, building, or agreements under the Stargate JV mandate.
OpenAI is working with others including Oracle (in a deal worth three times OpenAI’s annual revenue), and the smaller CoreWeave … for 5 gigawatts of data centers — which was the goal set out for Stargate.
Altman has said independently that OpenAI had ambitions on a scale without precedent: He has said trillions of dollars will be needed to fund the next stages of AI.
“This is the beginning of our golden age,” Son said in January at the White House.
OpenAI and SoftBank each pledged $18 billion to the venture to get started, which they expected would develop data centers and then lease them to OpenAI.
At that time they named Oracle and U.A.E. firm MGX as partners in the initial announcement, but their role was unclear and remains unclear.
“Stargate is not formed yet,” Oracle CEO Safra Katz said on an investor call last month.
Altman has used the Stargate name on projects that aren’t being financed by the partnership between OpenAI and SoftBank even though the trademark to Stargate is held by SoftBank, according to public filings.
These include the Abilene and Denton, Texas centers — which presently do not involve SoftBank according to WSJ reporting.
