Microsoft and OpenAI are working on a $100 billion supercomputer

Significance: The competition in AI development is intensifying among leading tech companies. Microsoft and OpenAI are preparing for a colossal initiative, intending to construct a vast data center in the US, referred to as “Stargate,” with a potential cost in the trillions.

According to The Information, Microsoft and OpenAI are conceiving a grand plan for a new AI supercomputer hub. Sources suggest that the budget could reach $100 billion for this facility, envisioned to accommodate millions of state-of-the-art AI processors.

The Stargate data center is envisioned as the most extensive among five AI hubs that Microsoft and OpenAI plan to create within the next six years, under their extended collaboration. If executed without hitches, Stargate is expected to be up and running by 2028.

The strategy is still evolving, but it’s anticipated that Microsoft will fund most of the $100 billion investment— an amount approximately 100 times greater than the cost of today’s largest data centers. The collaborators are considering various chip providers, such as Nvidia and AMD, and Microsoft might even meet the hardware requirements for Stargate internally. The design of the facility might lead to breakthroughs, including more compact server setups and advanced cooling technologies to manage the substantial computational demands and heat dissipation.

Microsoft and OpenAI’s alliance began in 2019, and since then, they have constructed several significant AI supercomputers, competing to advance the premier ChatGPT model and other AI generation tools. Their latest “Phase 3” system is already functional.

For the near future, Microsoft has sanctioned a $1 billion investment to enlarge a data center in Mount Pleasant, Wisconsin, which could evolve into a $10 billion “Phase 4” system, anticipated to be operational in 2026. Additionally, OpenAI is expected to release an upgraded AI model in early 2025.

The combined estimated cost of $115 billion for all planned AI endeavors by Microsoft and OpenAI vastly exceeds Microsoft’s annual $50 billion expenditure on its Azure data center network worldwide. The growing partnership and swift advancement in AI have attracted heightened regulatory attention in the US, UK, and Europe, due to potential antitrust issues.

If realized, the Stargate project’s sheer magnitude underscores the trend of companies making monumental, economy-influencing investments driven by a competitive mindset in AI technology.