As AI demand defies fears of a bubble, it is putting increasing strain on many products and resources. In some cases, such as with DRAM and NAND memory, suppliers are all too happy to try to keep up with the voracious demands of big AI firms. But in other cases, demand can outstrip supply without an obvious solution. That’s the case with Santa Clara, California, where some buildings, meant to be massive data centers, are sitting empty or underused. The problem: The local utility can’t provide the necessary power.
As Tom’s Hardware points out, Digital Realty and Stack Infrastructure have facilities in Santa Clara that, despite being fully built out, lack the power required to host the huge amounts of hardware they were designed for. And according to Bloomberg, the facilities may have to wait for years before the power arrives.
Microsoft data center in Wisconsin
Credit: Microsoft
Each of these projects could require 48 megawatts of power once the data center hardware is in place. Silicon Valley Power (SVP) is building its capabilities to meet the demands of the projects, and the city is investing hundreds of millions of dollars into upgrades to its power grid, but that will take time. Some upgrades may not be complete until 2028.
As TheStreet notes, Microsoft CEO Satya Nadella is also concerned about power infrastructure keeping up with the company’s data centers.
“I don’t have warm shells to plug into,” Nadella said. In other words, he lacks data center facilities that have power, water, and other resources necessary to get up and running. Nadella, speaking with OpenAI CEO Sam Altman and Bg2 Pod host Brad Gerstner, appeared to consider power a significant issue as Microsoft expands its AI capabilities.
Given the AI industry’s intense demand, it’s worth noting that a major player in the tech industry, SoftBank Group, revealed this week that it sold its $5.8 billion stake in Nvidia last month. However, the company appears to have effected the sale to invest in OpenAI. That company, which created the well-known ChatGPT AI model and counts Microsoft as one of its largest investors, sparked concerns this month over its massive infrastructure spending, according to the New York Times.
As we noted earlier this year, many businesses are still searching for ways to increase profits through the use of AI. That certainly doesn’t mean that the industry is experiencing a bubble; in fact, AI has continued to power record sales for multiple tech firms in the months since. But, as communities stretch to accommodate the power (and other resource) needs of massive cloud computing data centers, any news that could point to even just a potential softening of the market will likely worry city officials.
