Microsoft and OpenAI are embarking on an ambitious project to build a massive US-based data center known as “Stargate” as part of their ongoing AI arms race. The project, estimated to cost $100 billion, is set to house millions of cutting-edge AI chips, making it the largest of five planned AI installations.
Scheduled to become operational by 2028, Stargate will require significant innovations in server rack density and cooling solutions to handle the immense computational workloads expected. Microsoft is expected to finance most of the project, which is around 100 times more expensive than current data centers.
In order to make Stargate a reality, the partners are currently evaluating potential chip suppliers such as Nvidia and AMD. Microsoft is even considering the possibility of self-supplying hardware for the project. The collaboration between Microsoft and OpenAI dates back to 2019, with current AI supercomputer systems already in operation.
This announcement comes on the heels of Microsoft’s recent approval for a $1 billion data center expansion in Wisconsin, with plans for a $10 billion “Phase 4” system in 2026. However, the $115 billion combined price tag for all proposed AI projects has raised concerns about competition and regulatory scrutiny in the US, UK, and Europe.
The arms race mentality in the tech industry is pushing companies to make unprecedented investments in AI technology, shaping the economy in ways never seen before. With Stargate and other major projects on the horizon, Microsoft and OpenAI are positioning themselves at the forefront of AI innovation.
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