Microsoft and OpenAI forge $100 billion partnership to make a supercomputer

In a groundbreaking collaboration, tech titans Microsoft and OpenAI have unveiled plans to construct a revolutionary supercomputer named "Stargate," representing a significant leap forward in artificial intelligence (AI) technology. Estimated to cost a staggering $100 billion, this ambitious project underscores the escalating demand for advanced data centres capable of supporting cutting-edge AI applications, heralding a new era in AI development.

The venture, as disclosed by sources to The Information, is anticipated to be primarily financed by Microsoft, eclipsing existing data centre costs by over 100-fold. Scheduled for launch in 2028, Stargate is poised to lead a series of supercomputers envisioned by Microsoft and OpenAI over the next six years, as part of a comprehensive strategy aimed at unlocking the full potential of AI.

According to insider reports detailed by The Information, Microsoft and OpenAI are advancing through the third phase of their strategic plan, with Stargate marking the pinnacle of this multi-phased approach. The project signifies the fifth and final stage, representing not only a feat in hardware construction but also a substantial investment in securing the vital AI chips essential for the supercomputer's operation. Concurrently, Microsoft is spearheading the development of a smaller-scale supercomputer slated for deployment by 2026, with significant resources allocated towards the acquisition of specialised AI chips crucial for future phases. Stargate promises to revolutionise AI infrastructure.

The burgeoning demand for generative AI has fuelled a surge in specialised data centre requirements, posing challenges for AI development, particularly in securing the graphics processing units (GPUs) essential for AI model training. The scarcity and exorbitant costs of these chips have prompted companies to explore alternative solutions.

Leading AI chipmaker Nvidia has also grappled with meeting the soaring demand. Its latest chip, the Blackwell B200, carries a hefty price tag ranging from $30,000 to $40,000, as confirmed by CEO Jensen Huang in a recent CNBC interview. Despite substantial investments in research and development, Nvidia's market dominance has raised concerns regarding monopolistic practices and affordability.

In response, industry heavyweights including Intel, Qualcomm, Google Cloud, Arm, and Samsung have joined forces to establish the "United Acceleration Foundation." This collaborative initiative aims to create an open standard accelerator programming model to challenge Nvidia's software and hardware supremacy in the AI sector. By fostering cooperation and innovation, the foundation seeks to democratise AI technology access and foster healthy competition within the market.