Move over CHIPS Act, Stargate is the future – Asia Times
The US$$ 500 billion Stargate AI system project, which was announced by US President Donald Trump, has sparked media coverage and stoked industry, deflecting attention from the less attractive details of TSMC’s initial chip factory’s opening, and suffocate the more contentious debate over the future of America’s high-tech restoration.
On January 21, the day after his inauguration, Donald Trump made an appearance with Oracle’s Larry Ellison, Softbank’s Masayoshi Son, and OpenAI’s Sam Altman to make an announcement that artificial intelligence will be the “largest AI system job by much in story… creating over 100, 000 National work about immediately,” as Trump put it. Given some of the responses it has generated, the film went “viral” – a suitable information.
In Abilene, Texas, 10 properties measuring half a million square foot are currently under construction, with additional 10 more on the drawing board, and additional ones will be constructed at locations that are being evaluated nationwide. These data locations may be full of machines equipped with Nvidia’s fresh Blackwell AI chips, which are made by Taiwan’s TSMC, the world’s top silicon manufacturer.
” I’m gonna support, a bit, through emergency pronouncements”, said Trump, “because we have an emergency, we have to get this thing built”.
” They have to make a lot of power, and we’ll make it possible for them to get that generation done pretty easily”, he added, “at their personal crops if they want”.
In other words, Trump intends to supersede power regulations that may put off the project, leading to a significant increase in power generation capacity driven by the purchase intentions of a select few big high-tech companies.
Oracle’s Ellison said,” Thank you, Mr President. We certainly couldn’t do this without you”. Altman and Son shared the sentiment. And they probably couldn’t, at least not as quickly and efficiently.
If Joe Biden or Kamala Harris had been attempting the project in the White House, it would likely have been hampered by attempts at social engineering and unionization of the workforce. For the same reason, Stargate is based in Texas, not California.
Masayoshi Son said,” We wouldn’t have decided, unless you won. Yesterday, we agreed. We signed. To achieve this, we would immediately begin deploying 100 billion dollars with the intention of making 500 billion dollars within the next four years, within your mandate.
As explained by OpenAI, the initial equity investments in Stargate will come from SoftBank, Oracle, OpenAI and MGX, the technology fund based in Abu Dhabi. The lead partners are SoftBank and OpenAI, with OpenAI acting as the company’s operational manager and SoftBank as its financial advisor. Softbank’s Son will be the project’s chairman.
Nvidia, Arm ( the British semiconductor design company owned primarily by Softbank ), Microsoft, Oracle and OpenAI are the project’s technology partners. Oracle, Nvidia and OpenAI will build and operate the computing system.
OpenAI has long-standing relationships with both Nvidia and Microsoft. In Japan, Softbank and Nvidia have partnered to set up a nationwide AI grid.
Following Trump to the podium, Ellison, Son and Altman talked about healthcare-related applications from AI-enabled cross-referencing of health records and procedures to cancer detection and treatment, including the development of mRNA cancer vaccines.
But there are other possibilities, including factory automation and national defense. The name Stargate, of course, is reminiscent of Elon Musk’s Starlink satellite company.
The stock market approves of the concept. Oracle’s share price was up 7.2 % on Tuesday and another 4.6 % in after-hours trading. The share price of Softbank Group increased by more than 10 % on Wednesday and by another 5 % on Thursday in Japan ( across the International Date Line ). The share prices of Nvidia, TSMC, Microsoft and server maker Super Micro also rose.
Stargate is pitched as a made-in-America-for-America project, but the Nvidia AI processors at the core of the data centers will be made by Taiwan’s TSMC, at first entirely in Taiwan, then partly in the US.
At its new factory in Arizona, where TSMC is most likely to manufacture integrated circuits, on January 10, TSMC began producing integrated circuits for Apple. AMD and Nvidia are likely to be its new customers. For the first time in our country’s history, our country’s leaders are producing cutting-edge four-nanometer chips on American soil, making American workers on par with Taiwan in terms of yield and quality, according to incoming commerce chief Gina Raimondo.
TSMC Chairman and CEO C C Wei, speaking to investors on the company’s 2024 earnings call on January 16, confirmed this:
” We were able to pull ahead the production schedule of our first fab in Arizona, building on the successful result of our earlier engineering wafer production. Our first fab, using N4 process technology and yield comparable to those of our fabs in Taiwan, has already entered high-volume production in 4Q ’24. We anticipate a smooth beginning of the manufacturing process because we are confident that our factories in Arizona and Taiwan will offer the same level of manufacturing quality and dependability.
Wei added that “our plans for the second fab and third fab in Arizona are also on track.” Based on the needs of our customers, these fabs will use even more advanced technologies like our N3, N2, and A16.
In plain English, this means that TSMC will be making 4nm chips in Arizona starting this year and progress to 3nm, 2nm and 1.6nm ( 16-angstrom ), probably by the end of the decade. In terms of 3nm production, TSMC is already ahead of Samsung and Intel, who are both likely to be 1 nm and smaller. TSMC currently makes Nvidia’s Blackwell AI processors using its 4nm process.
All of these process technologies were and are being developed and produced in Taiwan, close to the company’s R&, D, and where the procedure is well-established and the capacity is much larger. This suggests that regardless of any agreement Trump has with China, he won’t want to disrupt Stargate’s main production.
A retired Silicon Valley executive and advisor to the US government on the subject of high-tech competitiveness said,” The game with the current administration is zero-sum,” in response to the three executives ‘ praise for Trump.
And that it is given that Trump has already replaced and exceeded$ 500 billion in government funding after cutting more than$ 300 billion from the Inflation Reduction Act and Department of Energy loan programs under his administration, which were then replaced by$ 300 billion from the private sector.
A West Coast venture capitalist who is not a fan of Trump wrote in an email that” It’s all part of the mad scramble for more computing power and energy to fuel it… Remember Trump’s first term. He enjoys planning big announcements, which credit him with making investments that were already planned or that never occur. Everyone tries to ingratiate themselves with Dear Leader, but it’s all part of that. Because that’s what you have to do in an autocratic state” . ,
Elon Musk, CEO of Tesla, wrote on X,” They don’t actually have the money. SoftBank has well under$ 10 billion secured. I have that on good authority”. However, if there is one thing Son excels at, it’s raising money. In 2017, Softbank launched the Vision Fund, a technology-focused venture capital fund with more than$ 100 billion in capital – the world’s largest such fund at the time.
For Musk, whose xAI competes with OpenAI and has taken it to court, Stargate is a powerful new competitor. And perhaps worse than that, Ellison, Son and Altman – high-tech moguls like himself – now also have Trump’s ear.
If the build-out of Stargate’s data centers proceeds according to plan, Microsoft, Google and Amazon are likely to lose their first-mover advantage and oligopolistic profit margins in AI-related cloud computing. Oracle, which offers cloud computing services in 25 countries around the world, has a significant opportunity in this regard.
Another critic, physician and biochemist Robert Malone, has published an essay entitled” AI, mRNA, Cancer Vaccines and” Stargate”: Reality check. Curb your enthusiasm, and beware of grifters”.
He writes:” I can’t believe that we are being spoon-fed this hype from the likes of Oracle’s Larry Ellison… Having this guy lecture us on mRNA vaccines for cancer is over the top.  , This is so amazingly ( and dangerously ) naive that I can hardly believe I am hearing it”.
Maybe so, but Ellison, Son and Altman were delivering a pitch for AI infrastructure, not explaining the technology roadmaps of companies that will use their data centers. They may be overly optimistic, but they are genuinely interested in healthcare and think AI can contribute significantly to the analysis of sizable amounts of medical-related data.
Malone also criticizes “banking some brand-new” cancer moonshot” television programs named after science fiction TV shows.” So, is Stargate a wise use of money or a reckless boondoggle? In reality,$ 500 billion is nearly ten times the$ 52.7 billion in grants and loans provided by the CHIPS Act. Only time will tell.
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