Elon Musk’s AI startup, xAI, is currently in talks to rent data centre capacity in Saudi Arabia, Bloomberg reported, citing sources. The move is part of the company’s strategy to improve its infrastructure in regions with low energy costs and favourable political conditions.
According to Bloomberg, the firm is in preliminary discussions with two potential partners: Humain, a Saudi-funded AI company providing xAI with several gigawatts of capacity, and another organisation which is constructing a smaller, yet more readily available 200-megawatt facility.
Despite being backed by Saudi Arabia’s Public Investment Fund, the company has reportedly not yet begun construction on the infrastructure it has committed to developing. Any collaboration with xAI would provide Musk with future computing resources, rather than being an immediate solution.
The AI startup has been increasing its data centre capacity to train more sophisticated models, aiming to compete more vigorously with OpenAI’s ChatGPT and Anthropic’s Claude. Its supercomputer cluster in Memphis, Tennessee, known as Colossus, is regarded as the largest in the world.
Leading tech companies are projected to invest $320 billion in AI this year, with both Meta and CoreWeave announcing substantial expenditures on AI data centres this week.
Within Humain, a technical team led by Jeff Thomas, is tasked with constructing the data centre infrastructure, whereas Saeed Al-Dobas manages the commercial negotiations.
According to the report, the project may be linked to Saudi Arabia’s previous investment in xAI, which was part of a broader initiative by Saudi royal Alwaleed bin Talal to strengthen connections between the kingdom and Musk’s enterprises.
Saudi Arabia’s Public Investment Fund is expected to be a significant player as xAI seeks to secure additional funding from investors in a transaction that could value between $170 billion and $200 billion, according to the Financial Times.
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