Stargate

The Powerbrokers and the Business Case

On January 21st, President Donald Trump announced the launch of the Stargate Project, a significant initiative to advance artificial intelligence (AI) infrastructure in the United States.

This project is a collaboration between OpenAI, SoftBank Group Corp., and Oracle Corp., with plans to invest up to $500 billion over four years. The initial investment of $100 billion will focus on constructing data centres and related infrastructure, starting in Texas. The initiative is expected to create over 100,000 American jobs and enhance the nation’s AI competitiveness against global powers like China.

During the announcement at the White House, President Trump emphasised the importance of keeping technological advancements within the U.S., stating, “What we want to do is we want to keep it in this country. China is a competitor, and others are competitors.” He highlighted the project’s potential to revolutionise sectors such as healthcare, with goals like curing diseases and improving early detection methods.

Key executives, including OpenAI’s Sam Altman, Oracle’s Larry Ellison, and SoftBank’s Masayoshi Son, joined President Trump for the announcement, indicating strong private-sector support. The collaboration aims to position the United States at the forefront of AI development, fostering innovation and economic growth.

While it was interesting to see a Japanese Bank participating in an initiative to secure US leadership, it was even more interesting to see MGX as an investor. MGX is closely related to the leader of Abu Dhabi, the largest emirate of the United Arab Emirates.

MGX

Although most people in the West may not know it, MGX plays a significant role in developing AI infrastructure and advancing technology initiatives. With the backing of Abu Dhabi leadership, MGX focuses on building scalable solutions, including advanced data centres and cloud platforms, to meet the growing global demand for AI applications.

MGX’s Chairman, H.H. Sheikh Tahnoon bin Zayed Al Nahyan, is also the UAE’s Deputy Ruler of Abu Dhabi and a central figure in directing the nation’s economic initiatives, including its push into AI and advanced technologies.

MGX is supported by funding and resources that largely stem from UAE-based government entities:

ADQ (Abu Dhabi Developmental Holding Company) is a key financial backer of MGX. It is a state-owned holding company focused on economic diversification and strategic investments. Mubadala Investment Company is one of the UAE’s most significant sovereign wealth funds. Leadership overlaps between Mubadala and MGX further align their objectives.

Mubadala

Mubadala Investment Company is one of the world’s most significant sovereign wealth funds, managing over $280 billion in assets. It was established to help diversify Abu Dhabi’s economy beyond oil and gas.

Mubadala invests heavily in semiconductors, AI, and cloud computing through holdings such as GlobalFoundries and partnerships with companies like NVIDIA and G42.

MGX's involvement in the Stargate project is not surprising, given its investments in the SoftBank Vision Fund.

Both Mubadala and MGX are fully aligned with the ruling forces in Abu Dhabi, which are being characterised as “an authoritarian state with a dismal human rights record and a history of using technology to spy on activists, journalists, and dissidents.” by Eva Galperin, director of cybersecurity at the Electronic Frontier Foundation.

The MGX’s investments in AI could be viewed through a lens of potential misuse for state surveillance or suppression of dissent.

This also demonstrates that the Trump administration does not share the same concerns about collaborating with the Middle East in AI as the Biden administration did.

G42 is a leading AI and cloud computing technology holding company based in Abu Dhabi and closely associated with MGX as the CEO of G42, Peng Xiao’ is on the MGX board

The G42 Group General Counsel, Martin Edelman, looks like one of the deal's powerbrokers. He is on the board of MGX and an advisor to Mubadala. He is also on the board of Globalfoundries, one of the company's investments. In Europe, Martin Edelman is known for being on the board of Manchester City FC.

Softbank

As a significant powerbroker in the AI and semiconductor space with early investments in ARM and Nvidia, it is no surprise that Masayoshi Son is involved in the Stargate project. With Softbank comes several ties:

Softbank has strong Chinese ties, although it has been more cautious over the last few years. Alibaba was one of Softbank's most successful investments. The 20M$ investment in 2000 turned into 60B$ when it was divested in 2022.

Jack Ma and Masayoshi Son share mutual admiration and respect, often speaking highly of each other publicly. Son has described Ma as having “the kind of charisma and capability that comes once in 100 years.” Jack Ma has referred to Son as a mentor and a key supporter of Alibaba’s success.

Softbank's investments in China are still significant despite a more careful approach.

The investment in Bytedance and TikTok is most controversial due to geopolitical tensions and data privacy concerns. TikTok’s ties to China have raised allegations of potential influence or surveillance by the Chinese government, particularly in the U.S. and other Western countries.

OpenAI

Established in 2015, OpenAI is a prominent research organisation in artificial intelligence. It is renowned for its work in generative AI models, such as its GPT and DALL·E breakthroughs. Under the leadership of Sam Altman, OpenAI transitioned from a nonprofit to a capped-profit model, allowing it to secure substantial funding from partners like Microsoft while enhancing its research and deployment capabilities.

Altman's leadership style has attracted much attention. Not known for his diplomatic skills, he ended up in a feud with Elon Musk, who used to serve on the OpenAI board.

When revealing his plans for a $7 trillion investment to construct 36 new semiconductor fabs to TSMC, the management reportedly referred to Altman as a “podcasting bro”, while the founder of TSMC, Dr CC Wei, more diplomatically called his goals aggressive.

It is unsurprising to see OpenAI in an aggressive plan like the Stargate project; however, Elon Musk is suspiciously absent. It is very hard to believe he is not involved, given his influence in the Trump administration. However, his criticism of the ability to finance this project suggests he is on the outside.

The Financing situation

Musk is not the only one who does not believe in financing this project. Many others have joined him and think it is unrealistic for the companies involved to do the heavy lifting. Musk has heard that Softbank “only” has secured $10B for the project.