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Yomiuri Shimbun
12-05-2025
- Business
- Yomiuri Shimbun
States Chase OpenAI's $100 Billion AI American Dream
Linda Tiso The land in Kenosha, Wisconsin, that the Tisos are hoping to sell to the $100 billion AI project known as Stargate. Linda Tiso could sell the 63-acre farm she grew up on in Kenosha, Wisconsin, to a residential developer but wants her inheritance to be part of 'an investment in the future.' So when ChatGPT maker OpenAI launched a nationwide search for sites for Stargate, a $100 billion project building data centers for artificial intelligence, she and her husband offered to make a deal. 'We have some property for sale in Wisconsin,' Tiso's husband wrote to an OpenAI staffer on LinkedIn. He highlighted the land's proximity to power lines and included a cellphone number. 'It's a good thing to be bringing here,' Tiso told The Washington Post. The Tisos – who are still waiting for a call – are players in a pageant of real estate developers, landowners, economic development agencies and elected officials vying for a piece of Stargate, which is being promoted as a historic project needed to turbocharge American AI and fend off China. The project was announced by President Donald Trump in January and will include five to 10 huge data centers stocked with powerful computer chips to support AI development. OpenAI and two of its partners, software maker Oracle and Japanese investment firm SoftBank Group, have said they aim to invest $500 billion into Stargate over the next four years. At the White House event where Stargate was announced, Trump said the project would 'create over 100,000 jobs almost immediately.' OpenAI's global policy director, Chris Lehane, compared the potential benefits to American workers and the U.S. economy as similar to the New Deal or the construction of the Transcontinental Railroad in interviews with The Washington Post. State officials seeking to host the data centers hope to win tax revenue and job creation, and OpenAI has proposed side benefits such as free computing for public universities and AI help for local governments. But there are questions about how many data centers or jobs will materialize and whether the tax abatements that governments offer companies to build such facilities are worth it. The search for suitable sites comes as local officials and residents have increasingly pushed back on data center projects, which involve large-scale construction and require access to fiber optic cables, water, land, and power lines. States are divided over whether to court more of the facilities or pump the brakes as some utilities struggle under data centers' thirst for power and water, and it becomes clear they create relatively few long-term jobs after construction is complete. SoftBank CEO Masayoshi Son spoke about Stargate at a White House event on the economy last week, calling it 'the largest investment for infrastructure in the United States' and the AI systems it will potentially power 'the future of mankind.' But history shows that mega-scale development projects hyped by politicians sometimes do not come to fruition at all: In Trump's first term, he announced that electronics manufacturer Foxconn would build a multibillion-dollar factory in Mount Pleasant, Wisconsin, but it never opened. In February, OpenAI said at least 16 states had shown 'real interest' in Stargate. By April, the company said it had received 250 site proposals in at least 20 states. It will announce finalists this spring. When The Washington Post contacted the 16 states for comment, most – including Arizona, Nevada, Maryland and West Virginia – declined to discuss their plans. Officials in Utah, Louisiana, Pennsylvania and Oregon have taken meetings with project representatives to discuss the deal, according to documents obtained by The Post via public records requests. Progress appears to have been rapid in Pennsylvania, where in February state officials discussed OpenAI's 'commitment' to and 'forthcoming Stargate investments' in the Pittsburgh area, according to emails between government staffers and OpenAI employees. No deal has been publicly announced. Oregon officials were also keen to be part of Stargate, emails from February showed – but data centers' unique needs mean they cannot be located just anywhere. In April, a spokesperson for Business Oregon told The Post that conversations with OpenAI are ongoing but the search for sites has not turned up 'any viable submissions.' That's why OpenAI is conducting a nationwide search, according to spokesperson Liz Bourgeois, who said the company 'intentionally avoided structuring the site selection process as some kind of competition because we want Stargate to be a catalyst for reindustrialization throughout the United States.' Mark Muro, a senior fellow at the Brookings Institution, said regional governments joining the race for Stargate should be wary of giving away too many tax incentives as they compete for OpenAI's attention. 'Many of these kinds of bidding wars leave business capturing most of the benefit,' he said. 'Overnight success' Trump announced Stargate on the first full day of his second term at an Oval Office news conference with Son of SoftBank, OpenAI CEO Sam Altman, and Oracle Executive Chairman Larry Ellison, who revealed in his remarks on the data center project that 'the first of them are under construction in Texas.' The news of Trump's involvement reverberated in Abilene, the small West Texas town where Oracle had been building a data center campus for some time. In a February town hall meeting, CEO Misty Mayo of the Development Corporation of Abilene joked that the deal she had been working on for five years 'apparently has been an overnight success.' The new attention prompted locals at city council meetings to ask pointed questions about tax incentives and whether pressure on the energy grid could produce fatal power outages like those caused by a 2021 winter storm. Around the same time, OpenAI and Oracle representatives started contacting state governments, emails obtained by The Post showed. An official in Louisiana said the state was 'very excited at the prospect' of hosting Stargate. Government staffers in Utah expressed 'interest in attracting AI investment in the state.' Oracle declined to comment on this story. The White House did not respond to a request for comment. Lehane said he and other staffers have also contended with a torrent of offers from landowners pitching their property. The company has encouraged some of them to reach out through formal email channels. Among the interested parties is Steve Karabin, a gas and oil engineer who owns land in central Pennsylvania. It sits on natural gas reserves that he said are attractive to data center companies looking 'to buy the electricity for the cheapest price they can get it.' He said he believes a Stargate-size data center would bring tax revenue and employment to an economically depressed area. 'I hope Pennsylvania gets to participate,' he said. Pennsylvania's government has been especially welcoming to OpenAI piloting ChatGPT for administrative work and hosted Lehane for a photo opportunity in March. Joanna Doven, CEO of a private-public enterprise called the AI Strike Team that is trying to draw tech investment to the state, said communities in the Rust Belt are eager for a project like Stargate. 'We have these old industrial steel sites sitting vacant in poor communities. These communities want data centers. They're not worried about pollution, they want taxes and they want jobs,' she said. 'People say it's not that many jobs. Well, there's nothing else going on here.' The coast-to-coast interest in Stargate has similarities to Amazon's 2018 search for a new headquarters. The company solicited dozens of proposals that saw cities and states compete to offer tax breaks and other incentives, but ultimately it chose bids from New York and Virginia. Neither office was fully built. (Amazon founder Jeff Bezos owns The Washington Post.) Patrick Adler, an assistant professor at the University of Hong Kong who studied Amazon's competition, argues that such contests encourage cities and states to award huge tax incentives while simultaneously providing companies with development data that could otherwise be a bargaining chip. OpenAI appears to be angling for the same 'super useful' information, he said. 'What's valuable is this insider knowledge about what sites can be packaged together to create a data center,' he said. For example, regional governments can use local connections to learn which property owners are ready to sell tracts of land, information that can be of huge help to a data center developer. Lehane said Stargate is not meant to pit states against one another in the way Amazon did, but acknowledged that the process provided OpenAI with a wealth of valuable connections and information. And as of this month, he has taken that search international, announcing an initiative called OpenAI for Countries that aims to launch versions of Stargate abroad, which was first reported by the Financial Times. Pushback As data centers have pushed into semirural or exurban communities in places like Missouri, Indiana and Minnesota, some residents have organized against them, even halting developments. In Virginia, home to the greatest concentration of data centers in the country, residents routinely protest new construction, raising concerns about noise, pollution and energy consumption. Some utilities and state officials are also trying to slow data center construction. Ohio, a state on Stargate's list whose officials declined to comment on this story, recently triggered a rush of data center projects with tax incentives, such as a 15-year break on sales tax, but the local power utility has warned it can't keep pace with demand. Lawmakers in California, where OpenAI is headquartered, have proposed legislation aimed at protecting ratepayers from electricity price hikes, while some municipalities in Arizona have banned new construction altogether. Oregon and Washington, long attractive to data centers seeking cheap hydroelectric power, are likewise considering new rules for data center electricity rates and scrutinizing their energy use. Tech companies have said they believe technological solutions to these problems are on the horizon. 'There's a lot of questions about data centers as a long-term, high-quality development,' said Muro of the Brookings Institution. 'States and regions need to ask for more.' In Abilene, Stargate construction has contributed to a local shortage of electricians for commercial jobs, according to Sam Garcia, an insurance agent and the former president of Abilene's Hispanic Leadership Council. He worries that local officials mistakenly think an industry that thirsts for efficiency gains will be a long-term economic engine. 'You're a sleepy little rural town, you're not going to become this big AI place,' Garcia said. 'I think it's a lot of PR.'
Washington Post
10-05-2025
- Business
- Washington Post
States chase OpenAI's $100 billion AI American Dream
Linda Tiso could sell the 63-acre farm she grew up on in Kenosha, Wisconsin, to a residential developer but wants her inheritance to be part of 'an investment in the future.' So when ChatGPT maker OpenAI launched a nationwide search for sites for Stargate, a $100 billion project building data centers for artificial intelligence, she and her husband offered to make a deal.
