OpenAI, under pressure to meet demand, widens scope of Stargate and eyes debt to finance chips

OpenAI, under pressure to meet demand, widens scope of Stargate and eyes debt to finance chips

• OpenAI’s Stargate excludes Microsoft projects, focuses on diverse partnerships
• Stargate says close to lining up 7 gigawatts of compute, nearly 70% of initial goal
• OpenAI plans to use debt financing for chip leasing

ABILENE, Texas/NEW YORK, Sept 24 – At the White House this year, OpenAI outlined its lofty “Stargate” infrastructure project that would cost half a trillion dollars and be developed with partners including SoftBank (9434.T), and Oracle (ORCL.N).

Now, after some fits and starts, OpenAI executives say the joint venture is far more expansive than previously outlined and involves almost everything OpenAI does related to artificial intelligence chips and data centers.

Stargate was initially conceived as a new company that would invest $500 billion in AI infrastructure. Now OpenAI executives say the parameters have expanded to include data center projects launched months before Stargate was announced.

OpenAI, best known for its ChatGPT chatbot, argues that the AI revolution needs computing systems like Stargate to deliver on its immense promise.

OpenAI will pursue different creative financing options, some of which have only emerged within the last year, to secure chips for the data centers, the executives added.

CEO Sam Altman has repeatedly said that creating data centers is the key to progress, writing in a blog on Tuesday that he eventually aimed to get to the point of building a gigawatt of new AI infrastructure, every week. Expanding chip availability was also the key idea behind the announcement of Stargate in January.

The initial vision for Stargate, however, ran into delays, executives said. Protracted negotiations with other parties and decisions on locations have bogged down the process, SoftBank’s Chief Financial Officer Yoshimitsu Goto said last month.

The sweep of projects in OpenAI’s expanded vision all have the same goal: to help meet significant demand for its AI tools.

Altman said, on Tuesday at a briefing with reporters, tech executives and politicians, including U.S. Senator Ted Cruz, and newly named Oracle co-CEO Clay Magouyrk,

We cannot fall behind in the need to put the infrastructure together to make this revolution happen,

The briefing was held at a massive data center in Abilene, Texas, where OpenAI and its partners are rapidly building a data center.

Despite widespread expectations that AI will fundamentally change the world, investors have voiced substantial concern about a potential bubble from building too quickly. Altman acknowledged those concerns while remaining optimistic.

He said,

There will be a lot of short-term ups and downs, day-to-day quarter, whatever,

He, said, gesturing with his hands sloping upwards,

You zoom out enough and the charts look like this,

A new partnership of up to $100 billion with Nvidia announced on Monday is part of the project. OpenAI plans to use an initial $10 billion in cash from the chipmaker to secure additional funding to use its products. OpenAI estimates that leasing instead of buying chips could save the company 10-15%, a person familiar with the matter said.

Executives familiar with Stargate said it would help OpenAI tap debt markets for future sites.

Stargate’s projects will not include some companies, including longtime sponsor Microsoft (MSFT.O), xecutives said. OpenAI negotiated terms with Microsoft to enable working with multiple partners.

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OpenAI, under pressure to meet demand, widens scope of Stargate and eyes debt to finance chips, source