NIXSolutions: xAI’s Shift from Oracle to Self-Built Supercomputer

Elon Musk’s AI startup xAI has abandoned plans to expand cooperation with Oracle. According to The Wall Street Journal, on Tuesday the billionaire reported on the social network X that xAI had stopped negotiations with the cloud provider on a $10 billion deal to expand the rental of computing power. The reason for the halt is that the startup itself plans to build “the most powerful cluster for training [AI models] in the world with a large margin.”


Deal Breakdown and New Plans

The Information resource, which previously reported the breakdown of the deal, mentioned that a multi-year lease agreement from Oracle for a supercomputer planned for construction on NVIDIA chips was already at the signing stage. However, the negotiations stalled due to Musk’s dissatisfaction with the construction timeframe proposed by Oracle. Oracle also announced a lack of access to an adequate source of energy to operate the AI supercomputer in the region selected by xAI.

Future Supercomputer Development

As a result, Musk announced that “the most powerful supercomputer in the world” will be built by the startup in Memphis (Tennessee, USA) and will begin operation in the fall of 2025. Musk previously announced that over the next few months, xAI will deploy a cluster of 100,000 NVIDIA H100 liquid-cooled accelerators, and next summer it will launch another cluster of 300,000 NVIDIA B200 accelerators, reminds NIXSolutions.

As the Data Center Dynamics resource noted, xAI already leases about 16,000 NVIDIA accelerators from Oracle, making it one of the cloud service provider’s largest clients. The startup also uses AWS services and reserve capacity in the data center of the social network X (Twitter). Oracle also provides its AI infrastructure to Microsoft and OpenAI. We’ll keep you updated as this story develops.