President Donald Trump has unveiled plans for an investment of up to $500 billion in private sector artificial intelligence infrastructure, initiating with the construction of data centers in Texas.
Leaders from OpenAI, Softbank, and Oracle, which is based in Austin, have committed to an initial investment of $100 billion, potentially reaching up to $500 billion, in a collaboration named Stargate over the next four years. Oracle’s Chief Technology Officer Larry Ellison, Softbank CEO Masayoshi Son, and OpenAI CEO Sam Altman made the announcement at the White House this past Tuesday.
According to Trump, Stargate aims to develop both the tangible and digital frameworks necessary to advance the next wave of AI technologies.
“We are facing competition from China and other countries. We aim to lead in this field right here in the U.S., and we are setting the stage for that,” Trump stated. “Through emergency declarations, I will facilitate this process as we are in a state of urgency to roll out these capabilities. This will include significant power production, which we will support to ensure it can be done effortlessly at their facilities.”
During the briefing on Tuesday, Ellison revealed that construction for 10 data centers has already begun in Texas, including a massive one-million-square-foot facility.
Ellison noted, “Currently, we have 10 buildings under construction, but we plan to increase this to 20 and expand to other sites beyond our initial location in Abilene,”
It was previously reported by CBS News that Stargate’s initial phase would start with a data center in Texas, with plans to expand into additional states subsequently.
“AI is incredibly promising for every American,” Ellison commented.
Trump also claimed that Stargate would quickly generate “over 100,000 American jobs.” Although specific details about Stargate and the wider partnership remain vague, additional investors are anticipated to join the initiative.
Oracle is one of the top data center operators in the nation and announced last April that it would be moving its headquarters from Austin to Nashville.
Softbank, a major Japanese investment firm, is poised to financially support the expansion of AI infrastructure. Son and Altman have reportedly discussed funding new semiconductor plants for AI chips, with Altman emphasizing the need for federal support to maintain a lead over China in the AI competition.
Altman described the initiative as “the most significant project of this era.”
Recent years have seen a surge in data center development in Texas, with a CBRE report indicating that the construction activity in Austin and San Antonio for the first half of 2024 multiplied by more than four times compared to the previous year. Dallas-Fort Worth holds the position as the second-largest data center market in the U.S., just behind northern Virginia.
Ken Fleischmann, a professor at the University of Texas School of Information, told the American-Statesman that such a massive investment in AI infrastructure could have a significant impact on Texas, particularly on Austin.
“With ‘Silicon Hills’ here in Austin, we have become a key hub for AI innovation globally and nationally,” Fleischmann said. “This investment could substantially boost AI innovation here in Austin, enhancing its economic vibrancy and further elevating Texas’ national and global stature.”
Regulating Artificial Intelligence
Fleischmann, founder of Good Systems: Ethical AI at UT Austin, stressed the importance of proactive regulation.
“In the realm of technology, especially AI, we’ve often been reactive. This was certainly the case with social media. With AI, we need to be proactive to manage its implications effectively,” he explained.
At the start of his presidency, Trump repealed Joe Biden’s 2023 executive order that set forth guidelines for generative AI. Generative AI, which can produce content such as text, images, and videos from open-ended prompts, contrasts with traditional AI designed for specific tasks. Biden’s order, established after legislative failures to set AI development boundaries, mandated that developers disclose safety test results for AI systems that could pose risks to national security, the economy, public health, or safety. It also directed agencies to establish testing standards and manage various risks. The Republican Party had criticized the order as stifling innovation.
Biden signed another executive order on January 14 to boost infrastructure for sophisticated AI operations within the U.S., which Trump has not rescinded.
Fleischmann believes that states like Texas should not wait for Congress to enact comprehensive AI regulations.
“In the meantime, it makes sense for Texas and other states to establish their own laws that cater to their residents. If enough states begin regulating AI individually, it could inspire a bottom-up approach that might inform federal policy,” he suggested.
State Rep. Giovanni Capriglione, R-Southlake, introduced the anticipated Texas Responsible Artificial Intelligence Governance Act in December.
The proposed act aims to:
- Compel companies to disclose their use of AI systems and explain their application.
- Set guidelines to prevent bias, discrimination, and misuse of AI.
- Implement safeguards to protect personal data within AI systems.
- Promote educational and training programs to prepare Texas workers for an AI-driven economy.
- Ensure free speech and prevent censorship of lawful political discourse.
Data Centers in Central Texas
Earlier this month, Trump announced that Dubai’s DAMAC Properties plans to invest at least $20 billion rapidly in data centers across the U.S., including Texas.
A Texas expert on electric system reliability told the Statesman that the Austin area might struggle to support extensive data center development in the next five years.
“While data centers can be constructed in months, generating and transmitting enough power to support them cannot keep pace,” said Alison Silverstein, a former board member for the American Council for an Energy Efficient Economy.
For context, the Electric Power Research Institute notes that AI requests, like those to ChatGPT, require ten times more electricity than traditional Google searches.
Fleischmann highlighted that the blackouts during the February 2021 winter storm exposed significant vulnerabilities and concerns regarding Texas’ power grid. He believes that substantial AI infrastructure and data center development in Central Texas could greatly benefit the state, particularly Austin.
However, Fleischmann also cautioned that more discussion and careful consideration are needed to ensure that the local community and energy systems are not adversely impacted by these developments.
“We could potentially host data centers serving global AI needs while balancing the needs of Austin residents. It’s a challenging balance,” Fleischmann noted. “The construction and maintenance of these data centers would likely create job opportunities and attract more high-tech employment to Austin, but we must also consider environmental impacts and emergency management implications.”
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Passionate about analyzing economic markets, Alice M. Carter joined THE NORTHERN FORUM with a mission: to make financial concepts accessible to everyone. With over 10 years of experience in economic journalism, she specializes in global economic trends and US financial policies. She firmly believes that a better understanding of the economy is the key to a more informed future.