**Nvidia to Provide Up to $105 Billion Guarantee for OpenAI's Ohio Data Center**
In a significant move to bolster its partnership with OpenAI, Nvidia has announced a guarantee of up to $105 billion to facilitate the leasing of a major data center in Ohio, currently under development by SB Energy, a subsidiary of SoftBank. This commitment marks one of Nvidia's largest infrastructure financing efforts to date.
The announcement was made on Monday by Nvidia's CEO Jensen Huang, who also revealed that the company will invest an additional $1.5 billion in SB Energy. This investment follows a previous $1 billion funding round from OpenAI and SoftBank aimed at expanding data center infrastructure.
The Ohio data center, located in Pike County, is set to become a pivotal facility for OpenAI, which has secured a 20-year lease for the site. The center is expected to have a total capacity of up to 8 gigawatts, with the initial phase of 800 megawatts projected to be operational by 2028. Nvidia will serve as the exclusive chip supplier for the facility.
Huang emphasized the strategic importance of this investment, stating that it is designed to secure long-lasting infrastructure for Nvidia's computing capabilities, enabling OpenAI to operate advanced AI systems that can be upgraded over time. "We are securing long-lived infrastructure for Nvidia compute so OpenAI can deploy the most productive AI factories," he said.
The financing structure for the project is still being finalized and is expected to include both equity and debt components. Sources familiar with the matter indicated that the equity portion may involve capital raised from a potential IPO of SB Energy and direct investments from SoftBank. Following the determination of the total equity amount, a debt component is anticipated, which could include project finance loans and possibly public debt instruments such as bonds.
As the demand for data centers grows, challenges related to land and power supply have emerged, particularly in the U.S. where the electrical grid is aging and communities are increasingly resistant to new construction projects. Nvidia's guarantee will cover a portion of the lease and power payments, ensuring the site maintains a minimum value. In the event of a default by OpenAI, Nvidia will step in to cover the difference between the guaranteed minimum value and any amount recouped through re-leasing or selling the site.
Experts have raised concerns about the potential for circular financing in the tech sector, where companies may rely on each other for funding. Danni Hewson, head of financial analysis at AJ Bell, noted that while investors are right to be cautious about the seeming cycle of AI investments, the limited number of players in the field suggests some degree of interconnected financing was inevitable. The true test of these investments will be their ability to generate substantial returns over time.
Huang also highlighted the potential financial impact of the Ohio site, estimating that it could contribute as much as $200 billion to Nvidia's revenue. With one gigawatt of computing power capable of powering approximately 750,000 U.S. homes, the implications of this investment are significant. Nvidia anticipates that by 2030, it could generate up to $600 billion in revenue from OpenAI by supplying a total of 16 gigawatts of computing power, which includes plans to expand the Ohio facility by an additional 3.75 gigawatts.
To support the data center's operations, SoftBank and SB Energy are planning to construct at least 10 gigawatts of new power generation capacity and invest $4.2 billion in regional grid infrastructure through a partnership with AEP Ohio. The project is expected to create approximately 35,000 construction jobs by 2032, along with around 2,500 long-term operational positions.
Local support for the project appears strong, with minimal risk of construction delays due to community opposition. The state government has expressed enthusiasm for the job creation opportunities associated with the development, and OpenAI and SoftBank have committed to investing $80 million in community projects as part of the initiative. The project also involves federal land and has garnered support from the U.S. Departments of Commerce and Energy.
As Nvidia continues to expand its influence in the AI and data center sectors, this partnership with OpenAI and SB Energy represents a significant step forward in meeting the growing demand for advanced computing infrastructure.