Microsoft CEO Satya Nadella recently participated in an interview and in it Nadella explained that the real problem that the AI segment has is not that there is excessive production of chips, but that we do not have enough energy to power all of them. It is confirmation of something that we have been seeing coming for a long time.
Too many chips for so little power. Both Nadella and Sam Altman, the CEO of OpenAI, participated in the interview. During it, the Microsoft CEO explained that “the biggest problem we have now is not excess computing capacity, but energy. It’s something like the ability to build (data centers) close enough to energy sources.”
Chips in the drawer. Nadella went on to highlight that “if you can’t do something like that (supply enough power), you’re going to have a bunch of chips sitting around in inventory that you can’t plug in. In fact, that’s my problem right now: It’s not that I don’t have a sufficient supply of chips: it’s actually the fact that I don’t have places to plug them in.”
A problem that was seen coming. Microsoft, like other companies that have opted for this segment, have been trying to prepare for this energy demand for some time. Two years ago, in autumn 2023, they were already looking for experts to lead its nuclear program. The objective: bet on the new SMR reactors which could be a good solution to power future data centers. Google was clear about exactly the same thing a year later, and reached an agreement with Kairos Power to build seven of those reactors from now to 2030.
I stew it, I eat it. Large technology companies that are dedicating billions of dollars to creating new data centers in the US have discovered that the current electrical grid may be insufficient for their needs. Their solution is to build their own plantssomething they hope can balance the demand and consumption imposed by these gigantic computing factories in which tens of thousands of AI accelerator GPUs work to serve current (and future) users of AI functions.
Growing needs. A report from the International Energy Agency (IEA) estimated that in 2022 between 240 and 340 TWh of energy will be used for data centers (excluding cryptocurrencies). This represents an increase of between 20 and 70% compared to 2015 consumption. Already in April 2024, that same organization warned that several countries will multiply this consumption significantly.
Triple energy? ARM CEO Rene Haas then pointed out that energy needs would triplebut he probably couldn’t know how events would develop. Since then, AI companies have announced mammoth projects —with Stargate at the helm—and they will dedicate huge amounts of money in an uncertain bet: that AI will be the great revolution that will drive our daily lives.
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