Nvidia backs OpenAI data center with $105b guarantee, fueling 'circular finance' debate

Nvidia, the world's leading AI semiconductor company, has agreed to provide a financial guarantee of more than $100 billion for OpenAI's data center construction project.

Nvidia said Monday it had signed a contract to provide a guarantee of up to $105 billion (about 149 trillion won) to cover costs associated with OpenAI's lease of a data center being built in Pike County, Ohio.

Nvidia will also invest $1.5 billion in SB Energy, a SoftBank subsidiary that is constructing the data center, making Nvidia a co-shareholder in the project alongside SoftBank Group and OpenAI.

Under the agreement, SB Energy will build the data center on the site and develop the power supply infrastructure, retaining direct ownership. OpenAI will lease the entire completed facility exclusively for 20 years.

Nvidia's guarantee covers only the first phase of the project, which represents half of the total development. The company has secured an option to decide later whether to extend the guarantee to the remaining phases.

The scale of the financial guarantee has drawn scrutiny from Silicon Valley and Wall Street, with critics questioning whether the arrangement amounts to so-called "circular finance" — a structure in which Nvidia backs the funding that OpenAI then uses to purchase Nvidia's own AI chips.

Nvidia CEO Jensen Huang shrugged off those concerns.

In a post on the company's website Monday, Huang rebuffed the characterization. "Is this circular financing? No," he wrote. "As OpenAI pays rent and capacity comes online, Nvidia's residual risk decreases."

"This is the same principle we apply to supply chain management," he added. "We commit key resources when we can see customer demand and secure long-term production capacity through it."

Huang projected that the data center would put about 1.5 million GPUs into operation, and that Nvidia could generate $600 billion in sales from OpenAI alone by 2030 — including revenue tied to this facility.

OpenAI said the data center is targeted for completion in 2032 and is expected to create 35,000 construction jobs and 2,500 permanent operations jobs, helping revitalize the economically marginalized Appalachian region.

"This will be a massive base that provides enough computing power for millions of people to actually do things we've only imagined until now — curing diseases, starting companies," OpenAI CEO Sam Altman said.

Anticipating potential pushback from local residents over the large-scale construction, OpenAI and SB Energy plan to establish an $80 million community benefit fund. In addition, OpenAI intends to provide local students with AI access credits worth up to $84 million.