What you need to know about ‘Stargate’, OpenAI’s new venture

President Donald Trump on Tuesday announced a $500 billion joint venture between OpenAI, Softbank, MGX and Oracle to build new data centers to power the next wave of artificial intelligence (AI) — in an early signal that his administration would embrace the technology to himself.

The plans, which predate the Trump administration and do not involve US government funds, would result in the construction of large data centers on US soil containing thousands of advanced computer chips required to train new AI systems.

Trump cast his support for the venture in part as a matter of national competitiveness. “We want to keep it in this country; China is a competitor,” Trump said of AI. “I will help a lot through emergency declarations – we have an emergency, we need to get these things built.”

The message echoed recent talking points from the heads of AI companies such as OpenAI’s Sam Altman, who flanked him during the White House announcement. Altman has argued more vociferously in recent months that the US must race to build the energy and data center infrastructure to create powerful AI before China.

The intention is to build data centers on US soil so that the US retains sovereignty over the AI ​​models is created and run there. However, some of the funding for Stargate comes from overseas via MGX, an investor owned by an Abu Dhabi sovereign wealth fund, and Softbank, which is Japanese.

OpenAI and Oracle have been working to build data center capacity in the US since well before Trump’s inauguration, and construction is reportedly already underway on some of the facilities associated with Stargate. However, the new president’s blessing is a victory both for OpenAI – which, like all technology companies, has tried to position itself in Trump’s favor – and for Trump himself, who has seized AI as a means to strengthen the American economy and achieve dominance over China.

Stargate also appears to mark an end to OpenAI’s exclusive cloud computing partnership with Microsoft, meaning the startup is now free to train its models with other providers. In return for early investment, OpenAI had agreed to train its AIs only on Microsoft’s systems. But the startup has previously chafed at what insiders believed was Microsoft’s failure to supply it with enough computing power, according to reports. Microsoft remains a major investor in OpenAI and receives a share of its revenue.

What could Stargate mean?

The goal behind Stargate is to create the infrastructure required to build even more powerful AI systems – systems that could perform the most economically valuable tasks better and faster than humans could, or that could make new scientific discoveries. Many AI investors and CEOs believe this technology, sometimes referred to as artificial general intelligence, is achievable within the next five years or less.

But to get there, these AIs must first be trained. This poses a problem because the bigger an AI you want to train, the more interconnected chips you need in a data center, and the bigger the power capacity of that data center needs to be. Currently, experts say, AI performance is bottlenecked by these two factors, especially power capacity.

Stargate would not only mean the construction of new data centers to house the latest chips, but also the construction of new energy infrastructure that could supply these data centers with the gigantic amount of power needed for an AI training run. These runs can last for months, with chips running day and night to shape a neural network based on connections within a large corpus of data.

“They need to produce a lot of electricity, and we’re going to make it possible for them to do that production very easily, at their own facilities, if they want to – at the AI ​​facility, they’re going to build their own energy production, and it’s going to be incredible,” said Trump on Tuesday. “It’s technology and artificial intelligence, all made in the USA.”

Much of this electricity is likely to come from fossil fuels. Trump has pledged to “free up” oil and gas drilling and has moved to block the grid’s transition to renewable energy. To cope with the increasing demand from US data centers for electricity, utility companies have delayed exiting coal-fired power plants and has added new gas plants.

Will Stargate happen?

It already is. Construction has reportedly already begun on a data center in Abilene, Texas that will house part of the Stargate project. But not all of the $500 billion promised for the joint venture is likely to be available at once. Of that figure, OpenAI said in a statement that Stargate would “begin implementing” just one-fifth, $100 billion, immediately. The rest will be deployed over the next four years.

Stargate’s announcement led to a rare moment of disharmony between Trump and his most powerful political cheerleader, Elon Musk. “They don’t actually have the money,” Musk submitted the X shortly after the announcement. “SoftBank has well under $10 (billion) secured. I have that on good authority.”

Musk has a long and rocky history with Altman. The pair co-founded OpenAI, but Musk reportedly left in 2019 makes an unsuccessful bid to become CEO; he now owns rival artificial intelligence firm xAI and is suing Altman, accusing him of abandoning OpenAI’s founding principles. Altman denied Musk’s claims at X, inviting him to visit the first site already under construction. “This is great for the country. I realize that what’s good for the country isn’t always what’s best for your businesses, but in your new role I hope you’ll mostly put first,” wrote he. He used to written: “I really respect your achievements and think you are the most inspiring entrepreneur of our time.” A spokesperson for OpenAI did not respond to a request for comment.

Regardless of the size of Stargate’s checking account, it would be foolish to bet against a massive increase in data center construction on American soil. Tech companies are already investing billions in building facilities where they can train their next AI systems. And with Trump in the Oval Office, it appears they have succeeded in convincing the highest levels of government that building more AI infrastructure is an urgent national security priority. “We would not be able to do this without you, Mr. President,” Altman said at the White House on Tuesday, addressing Trump. “And I’m thrilled that we’re getting there.”