Nvidia Backs OpenAI Data Center with $105 Billion Guarantee, Drawing Circular Financing Scrutiny

Nvidia is providing more than 100 billion dollars in credit support for OpenAI data center construction projects.

Nvidia announced on the 17th, local time, that it has entered into multiple "residual value guaranties" worth up to 105 billion dollars (approx. 149 trillion KRW) with SB Energy, a SoftBank subsidiary and the developer, regarding the lease agreement for the "PortPike" data center campus under construction in Pike County, Ohio.

Nvidia explained that this is "credit support to secure 4.25 gigawatts (GW) of computing capacity at this site."

Under the agreement, the tenant of this data center is OpenAI.

The contract term is 20 years.

Nvidia added, "A 4.25 GW AI factory could equate to about 1.5 million Nvidia GPUs or 150 billion to 200 billion dollars (approx. 211 trillion to 282 trillion KRW) in Nvidia revenue."

Phase 1 of PortPike has a capacity of 4.25 GW and will begin phased operations between 2028 and 2030.

The structure involves Nvidia providing credit support to SB Energy on the condition that Nvidia exclusively supplies its AI accelerators, while OpenAI—having signed a long-term 20-year lease—pays rent, which in turn reduces the guarantee amount provided by Nvidia.

Regulatory filings explained that if a "trigger event" occurs, such as OpenAI going bankrupt or failing to pay rent, Nvidia would instead pay SB Energy the difference between the "guaranteed minimum lease value" and the "amount recovered through alternative leasing or sale," while retaining the right to seek reimbursement from OpenAI for that amount.

Nvidia holds the discretion to provide a guarantee agreement with the same terms for the 3.75 GW capacity of PortPike Phase 2.

The completion of Phase 2 is set for 2032.

Nvidia added that, separate from the residual value guarantee agreement, it will invest 1.5 billion dollars (approx. 2.1 trillion KRW) in SB Energy.

Interpretations suggest that because OpenAI is a private company without a separate credit rating, it is borrowing Nvidia's balance sheet as a credit enhancement tool.

Surrounding these guarantees, Silicon Valley and Wall Street have raised criticisms of "circular financing," pointing out that Nvidia backs the borrowed funds, which OpenAI then uses to purchase Nvidia's AI chips.

In response, Nvidia CEO Jensen Huang dismissed these concerns.

Writing in a post published on the company's website that day, he countered, "Is this circular financing? No, it is not," adding, "As OpenAI pays rent and the capacity comes online, Nvidia's residual risk decreases."

He argued, "This is the exact same principle we apply to supply chain management: committing core resources when we can see customer demand and thereby secure long-term production capacity."

Nvidia explained that it has promised to deploy Nvidia AI infrastructure through 2030, noting that purchase commitments already made or planned correspond to about 12 GW of Nvidia compute resources, and that if Nvidia expands the PortPike guarantee agreement to Phase 2, that scale could increase to about 16 GW.

The company stated, "This level corresponds to approximately 600 billion dollars (approx. 850 trillion KRW) of Nvidia compute through 2030."

Meanwhile, SB Energy also plans to directly construct a new 10 GW gas-fired power plant to supply electricity to the PortPike data center campus.

Axios reported, citing the U.S. Department of Energy, that the construction costs for this gas plant are reportedly being funded by Japan under the U.S.-Japan 550 billion dollar investment agreement reached last year.

Additionally, SB Energy announced plans to invest at least 4.25 billion dollars (approx. 5.9 trillion KRW) into local grid infrastructure.

OpenAI CEO Sam Altman emphasized, "This will be a mega-base providing sufficient computing power for millions of people to actually do things they have only imagined until now, such as developing cures for diseases or starting businesses."

Fearing resident backlash, OpenAI, alongside SB Energy, plans to create an 80 million dollar (approx. 113 billion KRW) community partnership fund and provide up to 84 million dollars worth of AI credits to students in the region.

This deal contrasts with the Abilene, Texas site of the OpenAI-led "Stargate" project, which scaled back expansion due to financial difficulties.

Abilene saw Oracle and SoftBank funding operations through debt before canceling plans for a 2 GW expansion last March, leaving Nvidia in a position to arrange for excess capacity to be subleased to Meta.

Ultimately, while Abilene stands as an example highlighting the limits of debt-dependent financing, Ohio is evaluated as an attempt to bypass those limits through alternative methods like Nvidia's guarantees, according to assessments.

Bloomberg reported that while Nvidia has provided financial support to other AI infrastructure companies like CoreWeave and directly invested in OpenAI and Anthropic, this contract is the largest of its kind.

Nvidia disclosed in a filing on the 14th that it also holds 21 billion dollars worth of shares in Elon Musk's SpaceX.

(Photo: Provided by Nvidia, Yonhap News)
※ Please note: This article was translated by AI and may contain errors.