TLDR:
- Trump announced a $500 billion Stargate AI infrastructure project partnership between OpenAI, Oracle, and SoftBank, with an initial $100 billion investment
- Elon Musk publicly questioned the funding, claiming SoftBank has under $10 billion secured, leading to a clash with OpenAI CEO Sam Altman
- Microsoft, despite $14 billion investment in OpenAI, was only mentioned as a technology partner in Stargate and has modified its exclusivity agreement
- The Abilene, Texas site is already under construction as the first of potentially 20 data centers
- The project evolved from earlier initiatives by Crusoe Energy Systems and Lancium, focusing on renewable energy sources
A new artificial intelligence infrastructure project called Stargate, backed by OpenAI, Oracle, and SoftBank, was announced Tuesday with potential investments reaching $500 billion. President Donald Trump revealed the initiative, which begins with an initial $100 billion private investment.
The project’s first data center is already under construction in Abilene, Texas, marking the beginning of what Oracle co-founder Larry Ellison says could become a network of up to 20 facilities. Construction at the Texas site began approximately nine months ago, according to Abilene Mayor Weldon Hurt.
The announcement sparked immediate controversy when Elon Musk, who serves as a Trump adviser and leads a government cost-cutting initiative, challenged the project’s funding. On his social platform X, Musk claimed that SoftBank has “well under $10B secured,” questioning the financial backing of the venture.
OpenAI CEO Sam Altman quickly responded to Musk’s criticism, stating that Musk was “wrong” and invited him to visit the Texas construction site. Altman emphasized the project’s potential benefits for the country, noting that national interests should take priority over corporate advantages.
The Abilene facility emerged from earlier work by Crusoe Energy Systems and Lancium, who announced their collaboration in July. These companies had already begun developing a specialized AI data center at the northwest edge of the city, supported by what they described as a “multibillion-dollar investment.”
The location choice leverages Abilene’s diverse energy resources, including oil, gas, solar, and some of the largest wind farms in the world. Mayor Hurt highlighted the region’s energy production capabilities as a key advantage for the project, though Trump has recently paused approval of wind projects on federal lands.
Microsoft, despite its $14 billion investment in OpenAI, maintains a less prominent role in the Stargate project. The company appears as a technology partner alongside chip manufacturers Nvidia and Arm, rather than a primary investor. This shift follows Microsoft’s decision to modify its exclusivity agreement with OpenAI.
The revised partnership allows OpenAI to use other cloud services for training and running its AI models, with Microsoft’s permission. This change represents a departure from their previous exclusive cloud computing arrangement, which was set to run through 2030.
During the World Economic Forum in Davos, Switzerland, Microsoft CEO Satya Nadella addressed questions about the project by highlighting his company’s own $80 billion AI infrastructure investment plan, with $50 billion allocated for U.S. development.
The project’s scope extends beyond the initial Texas site. Oracle’s Ellison confirmed that approximately 10 data center buildings are currently under construction, with plans to potentially double that number.
The initiative builds upon groundwork laid in March 2024, when tech news outlet The Information first reported on OpenAI’s data center project called Stargate. The current version has evolved considerably from those early plans.
Energy management plays a central role in the project’s design. Lancium CEO Michael McNamara emphasized their focus on delivering maximum green energy at minimal cost, addressing the substantial power requirements of AI technology.
The announcement comes amid ongoing legal disputes between Musk and OpenAI. Musk, who helped found OpenAI and served on its board, has sued the company, claiming it strayed from its original nonprofit mission. A hearing on these matters is scheduled for February in a California federal court.
Mayor Hurt expressed optimism about the project’s impact on his region, noting that its scale exceeded initial expectations. The facility’s scope has grown to roughly triple the size originally anticipated.
The project represents a complex web of corporate partnerships and evolving relationships among tech industry leaders, with implications for America’s AI computing infrastructure development.
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