Nvidia to provide up to $105 billion guarantee for OpenAI’s Ohio data center

Nvidia has pledged a $105 billion guarantee to support OpenAI's development of a massive data center in Ohio, an endeavor backed by SoftBank's SB Energy. This significant infrastructure financing commitment marks Nvidia's largest to date. In addition to the guarantee, Nvidia will be investing $1.5 billion in SB Energy, following a $1 billion investment from OpenAI and SoftBank earlier this year.

The new deal comes amid heightened scrutiny over Nvidia's financing practices, which have raised concerns about potential circular funding flows between the chipmaker and its customers. Nvidia clarified that this particular deal is not circular financing, and that they're leveraging their scale and long-term vision to assist OpenAI in building "productive AI factories."

OpenAI will lease the Ohio facility for 20 years, with the first phase of construction expected to deliver 800 megawatts of power capacity by 2028. Nvidia will be the exclusive chip provider for the site, which boasts a maximum capacity of 8 gigawatts.

While the exact financing structure remains undefined, it is anticipated to include equity and debt components, potentially including capital from a future SB Energy IPO and direct investments from SoftBank. The equity may also come from raising capital by a potential SB Energy IPO and direct investments from SoftBank. The remaining debt is likely to consist of project finance loans and possibly public debt like bonds.

The data center's success hinges on overcoming challenges related to land acquisition and powering the facility, as aging and strained U.S. grid infrastructure and local opposition to new construction pose potential obstacles. Nvidia's guarantee addresses a portion of the lease payments and power obligations, ensuring the site retains a minimum value.