You surely remember the scene from the movie The Social Network where Justin Timberlake, in his role as Sean Parker, says to Mark Zuckerberg, "A million dollars isn't cool. You know what's cool? A billion dollars.' Ah, what simple, innocent times those were, looking back now. The CEO of OpenAI, Sam Altman, who was kicked out of his own company just a few months ago, has only been back in office for a few weeks but is laughing at millions and billions: Altman is looking for seven trillion dollars. Or: seven thousand billion dollars. For an idea, not even for an existing company yet. What's going on?
The Wall Street Journal reported on Thursday that Sam Altman, the CEO of OpenAI, is seeking five to seven trillion dollars to build a global network of chip factories. It was already rumored last year that Altman wanted to set up a chip factory competing with Nvidia under the code name Tigris, but at the time it was not suspected that trillions were involved. The now leaked seven trillion in numbers is 7,000,000,000,000,000, a seven with 12 zeros.
Wait, how much?
To put this in perspective, in 1995 the Internet hype started with Netscape's IPO, much to the dismay of the traditional investment market because the browser maker was not yet making a profit, even though it had millions of users of the popular browser Navigator. On opening day, Netscape raised $82.5 million with the stock sale.
So Altman wants to raise eighty-five thousand times more money from private investors for his idea, for that is all it apparently is yet, than Netscape fetched on the Nasdaq. Times are changing.
To make another attempt to indicate how much money is involved: Altman wants to raise more than a third of the GDP of the entire European Union, the second largest economy in the world, with $7 trillion. The GNP of this planet, by the way, is $88 trillion; Altman would like 8% of that, so he can make a nice clean start.
According to the Wall Street Journal, Altman is in talks with the United Arab Emirates sovereign wealth fund, among others, and then I suspect it's not Dubai, which is better at marketing than making money but the wealthy oil-producing Abu Dhabi. Primarily through its sovereign wealth fund, Mubadala, Abu Dhabi is looking for new sources of revenue as oil wells appear to be slowly but surely closing to retain a chance of a livable planet.
It is plausible that Altman is also swinging by the Emirates' friendly big neighbor, Saudi Arabia, which is gaining traction with the sovereign wealth fund PIF (note the windmills at the top of the page, apparently Saudi Arabia is famous for those).
What do you spend 7 trillion on?
Altman seeks to address a critical bottleneck to OpenAI's growth: the scarcity of advanced graphics processors (GPUs) essential for training advanced AI models, such as his extremely popular ChatGPT. Despite the success of OpenAI and competitors such as Google Gemini and Anthropic, all of these billion-dollar companies are standing hat in hand at the doors of chipmaker Nvidia, whose lead as as maker of the best GPUs seems unsurmountable. But there's one thing: Nvidia can't handle the demand. And Altman doesn't want to be dependent on one supplier.
Altman announced on Twitter, a day before publication of the Wall Street Journal article:
"We believe the world needs more AI infrastructure - manufacturing capacity for fabs, energy, data centers, etc. - than people currently plan to build. Building AI infrastructure on a massive scale, and a resilient supply chain, is critical to economic competitiveness. OpenAI will try to help!"
- Sam Altman
Solid plan or pipe dream?
His ambitious plan involves setting up a network of several dozen chip factories ("fabs") that would ensure a steady supply of the crucial chips not only for OpenAI but also for other customers worldwide. The plan involves cooperation between OpenAI, investors, chip manufacturers including market leader TSMC, data centers and power producers. Because without their own power plants, chip factories cannot operate on this scale.
What is striking about Altman's tweet is his specific mention of data centers. That means he not only plans to reduce his dependence on Nvidia, but also wants to get rid of his reliance on cloud-based solutions like Microsoft now runs for OpenAI and Google for Anthropic. Microsoft owns 49% of OpenAI's shares and was instrumental in allowing Altman to return to OpenAI after the Palace Revolution in November, so that will be an interesting issue to follow.
If this initiative becomes a reality, it would mean that the AI industry and many other computing power-guzzling industries could realize their ambitions. But regardless of the money, it will result in a complex ownership structure where it is still unclear who will control and own the intellectual property, aside from all the chip factories, data centers and power plants.
Sustainability and geopolitics major challenges
Sam Altman's plan to radically scale up superchip manufacturing has significant sustainability implications. The environmental footprint of chip factories is significant; they are energy-intensive facilities that also require large amounts of water and produce harmful waste.
The unprecedented scale of Altman's idea would put enormous pressure on natural resources and energy networks. The environmental impact is compounded by the need for new power plants, which will increase CO2 emissions unless renewable energy sources are used exclusively. With financiers from the Middle East, that does not seem a reasonable priority.
Just last week, the Biden administration proudly announced a new initiative in which the U.S. is investing $5 billion in a public-private partnership aimed at supporting research and development in advanced computer chips. This initiative was completely drowned out by the WSJ article on Altman's plan.
President Biden's move underscores once again that the U.S. government recognizes the importance of high-performance chips, and therefore Altman's plan could quickly fuel geopolitical tensions. By attempting to expand chip production within a U.S.-led framework, China will surely respond, as it has also been explicitly pursuing high-end chips with Huawei playing a major role in recent years.
Superchips are a matter of national security and long-term economic growth. China will not stand idly by in the face of a concentration of production of these chips by US allies, possibly leading to retaliatory measures in which US companies and their partners will find it even more difficult to access the Chinese market. Altman's project therefore already casts the shadow of an intense trade war between China on the one hand and the U.S. and its allies on the other.