OpenAI is considering the construction of an enormous data center, capable of processing a gigawatt of power, in India, amidst speculations of an industry bubble.
The US-based artificial intelligence (AI) company, OpenAI, has announced plans to build a gigawatt-scale data center in India, marking a significant expansion of its global footprint. This move comes amidst ongoing trade tensions between the US and India, and questions about the sustainability of the AI market.
OpenAI's ambition is to quickly scale up American AI data center capacity and entrench American AI developments as the premier solution for countries. The company has already secured deals with the Indian federal government to build large and small language models for government use.
However, the US/India trade spat could potentially impact OpenAI's data center plans. The US administration has imposed a 50% trade tariff on India over its continued purchase of Russian oil products, and there are indications that the US may respond with further restrictions on trade if India remains stalwart in its stance on US tariffs. This could impact important electronic components for AI data centers.
India, OpenAI's second-largest market, has the potential to become its largest, depending on political relations. OpenAI is currently in talks with Indian officials and local companies to secure the land necessary to begin construction of the data center in India. The exact location, timeline, and government contacts remain uncertain while OpenAI expands its presence and prepares for a possible announcement during CEO Sam Altman’s September visit to India.
Meanwhile, the Reliance Group, led by Indian billionaire Mukesh Ambani, is developing a data center with a total capacity of three gigawatts, which would be the largest in India. The Reliance Group's data center will primarily use renewable energy, aligning with India's commitment to sustainable development. The data center is expected to come online in 2027, according to Bloomberg.
The news of OpenAI's plans in India comes at a time when the AI market is facing uncertainty. Many analysts have questioned whether the AI bubble is easing closer to bursting. This sentiment is reflected in recent setbacks for other AI companies. Meta's AI division has implemented a hiring freeze, and OpenAI's next-generation language model, GPT-5, had a disastrous launch.
Despite these challenges, OpenAI is pressing forward with its plans, seeking regulatory approval and exploring local energy sources for the data center in India. The company has also inked deals for a 520-megawatt-scale data center in Norway and an unprecedented facility in Abu Dhabi.
The official announcement for OpenAI's new data center project in India is expected in the coming weeks. OpenAI's CEO, Sam Altman, is expected to make an official announcement about the data center during his visit to India later this month. The development of this data center could significantly boost India's AI capabilities and further strengthen the relationship between the US and India in the tech sector.
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