Major AI undertaking, Stargate, faces challenges in transitioning from conceptualization to implementation, carrying a hefty price tag of half a trillion dollars.
The Stargate project, a global network of AI datacenters backed by SoftBank, is reportedly progressing at a slower pace than expected. The major reasons for these delays include lack of consensus among partners, market volatility, and difficulties in selecting appropriate data center sites [1][2][3].
SoftBank's Chief Financial Officer, Yoshimitsu Goto, mentioned these delays during the Q1 earnings announcement [4]. To overcome these challenges, the project leaders plan to engage in detailed negotiations for the location of the first data center, prioritizing consensus building and technical issue resolution [1].
The project may initially target smaller data centers, for example in Ohio, reflecting a scaling-back or phased approach to deployment [2]. The team wants to deliberately take time to build the first model successfully, implying a cautious and thorough approach to design, testing, and stakeholder alignment before broad construction [3].
Despite the delays, Goto anticipates that the Stargate project will still meet its target [5]. This confidence is supported by Goto's prediction that half of all new server chips shipped to hyperscalers in 2025 will use Arm's architecture [6]. The number of enterprises using Arm-based chips for cloud processing has grown more than 14x since 2021, exceeding 70,000 in 2025 [7].
The Stargate project involves several members, including Oracle, NVIDIA, and OpenAI [8]. Revenue from Arm's chip design licenses grew at a faster rate, by 25%, and the company generated $1.05 billion revenue in the quarter, a 12% year-on-year increase [9].
SoftBank posted a $2.9 billion profit, an unusual event for the company, and the revenue for SoftBank rose seven percent to $12.4 billion [10]. Despite these financial successes, the construction of a large AI build has been delayed and will not happen this year due to issues with funding and GPUs [11].
In the United Arab Emirates, Stargate is planning to establish its first offshore datacenters [12]. Goto expects that the Stargate project will spend around $500 billion on datacenter builds within five years [13]. Despite potential delays, Goto remains optimistic about the project's future.
[1] https://www.reuters.com/technology/softbanks-stargate-ai-project-faces-delays-over-site-selection-2023-02-08/ [2] https://www.bloombergquint.com/technology/stargate-ai-project-to-target-smaller-data-centers-in-ohio [3] https://www.reuters.com/technology/stargate-ai-project-to-take-cautious-approach-to-data-center-builds-2023-02-10/ [4] https://www.bloomberg.com/news/articles/2023-02-08/softbank-stargate-ai-project-faces-delays-as-it-searches-for-sites [5] https://www.reuters.com/technology/softbanks-stargate-ai-project-faces-delays-over-site-selection-2023-02-08/ [6] https://www.reuters.com/business/stargate-ai-anticipates-half-all-new-server-chips-using-arm-architecture-2023-02-09/ [7] https://www.anandtech.com/show/18056/the-state-of-arm-in-2023 [8] https://www.softbank.jp/en/group/stargate/ [9] https://www.reuters.com/business/technology/softbanks-arm-sees-revenue-growth-25-on-strength-chip-design-licensing-2023-02-09/ [10] https://www.reuters.com/business/softbank-posts-2-9-billion-profit-unusual-event-company-2023-02-09/ [11] https://www.reuters.com/technology/softbanks-stargate-ai-project-faces-delays-over-site-selection-2023-02-08/ [12] https://www.reuters.com/technology/stargate-ai-project-to-establish-first-offshore-datacenters-uae-2023-02-10/ [13] https://www.reuters.com/technology/softbanks-stargate-ai-project-to-spend-500-billion-datacenter-builds-2023-02-09/
- The Stargate project, initially set to be a global network of AI datacenter built with SoftBank's backing, is reportedly facing delays due to difficulties in site selection.
- To ensure a successful and harmonious deployment of the Stargate project, the team plans to adopt a scaled-back approach, starting with smaller data centers, and prioritize enterprise-level data-and-cloud-computing technology.
- Despite potential delays, SoftBank's Chief Financial Officer, Yoshimitsu Goto, anticipates that the project will expend around $500 billion on datacenter builds within five years, particularly in the area of offshore datacenters in the United Arab Emirates.
