Elon Musk’s startup xAI and Oracle have decided to end discussions on a potential $10 billion server deal. The two companies were in talks to expand an existing agreement where xAI leased Nvidia artificial intelligence chips to Oracle. However, these negotiations have now come to a halt.
Musk’s xAI is now working on a system using Nvidia’s H100 graphics processing units independently to expedite the process. Oracle had a specific capability in mind for xAI, but this has now been assigned to another customer. Despite this, Oracle continues to engage with xAI regarding its infrastructure needs.
The initial plan was for xAI to lease Nvidia processors to Oracle for a supercomputer project. However, talks hit a roadblock due to Musk’s ambition to create a faster supercomputer than Oracle believed to be feasible. Additionally, Oracle had concerns about the power supply at xAI’s preferred location.
xAI already has a contract in place to train AI models on Oracle’s Gen2 cloud. As the negotiations between xAI and Oracle come to a close, the future of their partnership remains uncertain. This development marks a significant shift in the AI landscape, with both companies exploring new opportunities and challenges in this rapidly evolving industry.
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