Nvidia plans to provide $250 billion in financing guarantees for Open AI data centers
Nvidia plans to provide OpenAI with a huge financing guarantee to further bind the AI (artificial intelligence) infrastructure of both parties. On July 26, local time, foreign media reported that Nvidia planned to provide approximately US$250 billion in financing guarantees for the large-scale data center being built by OpenAI to support the latter’s leasing of a 10-gigawatt (GW) giant data center park in southern Ohio, USA. The data center project was developed by the energy subsidiary of Japan’s SoftBank Group.
Nvidia plans to provide OpenAI with a huge financing guarantee to further bind the AI (artificial intelligence) infrastructure of both parties. On July 26, local time, foreign media reported that Nvidia planned to provide approximately US$250 billion in financing guarantees for the large-scale data center being built by OpenAI to support the latter’s leasing of a 10-gigawatt (GW) giant data center park in southern Ohio, USA. The data center project was developed by the energy subsidiary of Japan’s SoftBank Group. According to people familiar with the matter, if the chips used inside the data center are included, the total investment scale of the project may reach about 500 billion US dollars, which means that this will be the largest data center project announced so far. The park will take many years to build, with the first phase expected to be completed in 2028 and produce approximately 800 megawatts of electricity. With Nvidia's endorsement, the data center's developer, SoftBank Group, will be able to raise debt on more favorable terms. OpenAI has been in talks for weeks to lease space, with tech giants such as Google, Microsoft and Anthropic also joining the fray. As a pre-profit private company, OpenAI does not currently have an investment-grade credit rating. People familiar with the matter pointed out that under the cooperative arrangement, Nvidia will guarantee a series of financing instruments designed to give lenders more confidence in the security of funds behind the project. Nvidia's guarantee will cover the cost of leasing the data center and the debt needed to finance its construction, but will not cover the Nvidia chips that will be installed inside. The relevant terms have not yet been finalized and the deal may still fall apart. The data center will be the first in which OpenAI participates as a tenant, giving it increased control over its infrastructure. Recently, OpenAI raised the company's computing power expenditure budget by 2030 to approximately US$750 billion from its previous estimate of approximately US$600 billion. At the same time, other news said that Nvidia is also discussing providing financing for OpenAI to purchase chips, and the amount may be as high as 350 billion U.S. dollars. This circular financing model has once again raised concerns from the outside world: If investor sentiment changes or the growth of AI companies slows down, the market will become more fragile. In this regard, Michael Burry, a well-known investor and Wall Street "big short", lamented on the The "Wall Street Journal" analysis pointed out that investment-grade technology giants are increasingly using their own balance sheets to help smaller companies finance and borrow for their infrastructure needs, a phenomenon known in the industry as "Credit Wrapper." For example, Google has previously endorsed Anthropic's data center project, in part to increase sales of its own AI chips, known as tensor processing units (TPUs). Currently, Nvidia is also working hard to lock in greater chip demand. The company previously warned that the data center financing plan could reduce its near-term cash flow and increase its exposure to customer credit risk.