Nvidia-OpenAI partnership: US chipmaker plans to invest $3 billion in SB Energy; what we know
Jensen Huang-led US chipmaker Nvidia is in talks to invest roughly $3 billion in SB Energy, a subsidiary of SoftBank Group that is developing a massive data centre project in Ohio for OpenAI, The Information reported on Saturday, citing people familiar with the discussions.
The proposed investment comes as Nvidia is also in talks with OpenAI and SB Energy about providing around $100 billion in credit support for the planned data centre campus in Ohio.
Here’s what we know about the proposed deal:
The chipmaker plans to invest half of the $3 billion once the Ohio project is signed and the other half as part of SB Energy’s planned initial public offering (IPO), which could take place as soon as next month and is expected to raise $5 billion.
Backed by OpenAI, SB Energy develops large-scale power and data centre infrastructure projects. Founded in 2019, the company is building several data centre campuses to support the growing demand tied to artificial intelligence (AI) workloads.
The latest development comes after Nvidia reportedly scaled back its planned financial support for the Ohio data centre project. The Wall Street Journal on Friday (local time) reported that Nvidia and OpenAI are in the final stages of a deal to finance a large-scale data centre campus in Ohio, but have restructured the agreement so that Nvidia would initially guarantee only half of the project’s planned multi-hundred-billion-dollar cost.
Nvidia trims planned $250 billion guarantee for OpenAI project
Under the revised plan, Nvidia’s initial financial guarantee would be reduced from the previously discussed $250 billion to less than $120 billion, in a move aimed at easing investors’ concerns over the company’s exposure to risk as it uses its balance sheet to support demand for its artificial intelligence chips. A deal is expected to be signed as soon as the weekend, the report added.
Under the proposed arrangement, Nvidia would financially back the project’s first phase, which would involve about five gigawatts (GW) of power. The chipmaker would then decide whether and how to fund the remaining capacity. OpenAI is still negotiating a binding lease for 10 gigawatts (GW) of the project, which could be signed in the coming days.
SB Energy is reportedly developing the 10-GW site, which could become the largest data centre project announced to date.
The initial guarantee would cover the data centre lease and the debt needed to build the project. It would also help reduce borrowing costs by giving lenders greater confidence that the project has secure financial backing.
Nvidia-OpenAI earlier partnerships
Separately, the chipmaker is also in talks for a deal to finance OpenAI’s purchase of chips, which could be worth up to $350 billion for the entire project. The US government controls the power supply for the project, while Japan is providing separate funding under a recent trade agreement.
The current financing talks come after an earlier partnership between Nvidia and OpenAI encountered delays. In September last year, the companies signed a memorandum of understanding (MoU) under which Nvidia would help develop at least 10 GW of computing capacity for OpenAI and invest up to $100 billion to support the project. However, the agreement later stalled amid concerns raised by several Nvidia officials.
