Is the AI computing crunch is turning rivals into partners?

[PhotonBurst]

The Wall Street Journal has a piece on how the shortage of AI computing power is turning rivals into partners. It sits behind a paywall, but the trend it describes is easy to see in deals reported elsewhere this year. Companies that compete fiercely on AI models are now renting computing power from each other. Demand for chips and data centre capacity has simply outrun supply

The most striking example is Anthropic renting capacity from xAI, Elon Musk's AI company. According to Forbes, which cites terms disclosed in SpaceX's May filing, Anthropic pays about $1.25 billion a month for xAI's Colossus 1 facility in Memphis, running through May 2029. Either side can end the deal on 90 days' notice. Not long ago, a deal between those two would have seemed unthinkable

The scale of spending is enormous. Data Center Dynamics reported in September that Anthropic had signed roughly $517 billion in compute agreements over about eleven months, adding up to around 14.8 gigawatts. That includes a reported $200 billion agreement for Google TPUs. Google is both a cloud supplier and a direct competitor in AI models

This is a big change in how the industry works. For years, the big labs tried to build or secure their own capacity and keep it to themselves. Now nobody can build fast enough, so spare capacity is being rented to whoever pays. The 90 day exit clause in the xAI deal shows both sides want flexibility, in case the balance of supply and demand shifts again

It also raises some interesting questions. Running your models on a rival's hardware means trusting them with a lot of sensitive information about your workloads. Regulators may start asking whether these deals reduce competition. And if demand ever drops, some very expensive commitments could look painful in hindsight

Is it healthy for AI rivals to rely on each other's data centres? And do you think this computing crunch will last?

The Ai Computing Crunch Is Making Rivals Into Partners 09431721www.wsj.com

[Noob]

Cloud computing went through something similar. Companies that competed in other areas still bought capacity from AWS, Azure and Google Cloud. It became normal quickly. AI compute may follow the same path