NVIDIA mulls $250B financing guarantee for OpenAI data center
What's the story
NVIDIA is reportedly in talks to provide around $250 billion in financing guarantees for OpenAI. The deal would be part of a massive data center project, The Wall Street Journal reported on Sunday. The financial backing from NVIDIA would enable the ChatGPT developer to lease a 10-gigawatt facility currently being developed by SoftBank's energy subsidiary in southern Ohio.
Power control
Power supply funded by Japan under a trade deal
The power for this project is under the jurisdiction of the US government and is funded separately by Japan under a recent trade deal.
The deal is tied to Tokyo's commitment to invest $33 billion in a natural gas plant.
US Commerce Secretary Howard Lutnick is involved in deciding who gets access to this power supply, according to The Wall Street Journal.
Infrastructure transition
Major shift for OpenAI and NVIDIA
If the deal goes through, it would mark a major shift for OpenAI. The company would be taking its first steps toward controlling its own infrastructure instead of renting from tech giants such as Microsoft, Amazon, and Oracle.
For NVIDIA, this deal would ensure a steady demand for its chips over the coming years.
Financial details
Total cost of data center project exceeds $500 billion
The total cost of the data center project is estimated to exceed $500 billion, including the chips that will be used inside it.
The $250 billion guarantee from NVIDIA would cover both the lease and debt financing for the data center, but not the cost of NVIDIA chips inside it.
The chipmaker is also said to be in talks to finance OpenAI's chip purchases worth up to $350 billion.
Project timeline
First phase expected to be completed by 2028
The first phase of this ambitious project is expected to be completed by 2028, with an estimated power output of around 800 megawatts.
NVIDIA's support would back financing vehicles aimed at reassuring lenders about the project's funding.
The deal highlights a broader trend where tech giants are increasingly turning to debt and equity markets to fund their AI infrastructure projects.