Actually a couple data points. By some metrics, the US is experiencing the largest infrastructure build out in history and as we know, it is being driven by data centers and AI. An example is today’s Google’s agreement with Constellation Energy for 3.6 GW of power, with a quarter of that being new nuclear.
That sector of the economy is booming, but other sectors like retail, transportation, manufacturing, labor, etc. are weak. And some things manufacturing and transportion are being supported by the data center boom. Without the data center and chip spending, we might be close to, or actually in a recession.
A major bottleneck in data center construction currently is a short of transformers and switchgear, of which only 20% is made in the United States. Under Section 252, the POTUS has placed tariffs of 100% on these items.
Tariffs have successfully reduced US manufacturing jobs and output, and possibly could have equal success blunting data center construction in the US. If the tariffs work as designed, we could be in for some rocky economic times.
But is it the infrastructure we really need? Beyond the power production, no, it’s not. This is going to make the dark fiber problem of the dot-com bust look like small potatoes.
High Interest Rates Aren’t Slowing the A.I. Boom. That’s a Problem for the Fed.
Rising borrowing costs are taking a toll on households and businesses. But they are doing little to dampen enthusiasm for investments in A.I. infrastructure, which are contributing to inflation.
According to [Cleanview], an energy data company, 180 new data center buildings were completed last year, a 170 percent jump from 2021. Those new projects were spread across 22 states, including almost 50 new buildings in Virginia alone. (Cleanview considers a data center to be any building dedicated to computing or holding servers.)
It’s a surge of construction that can be best seen from the sky, using aerial imagery.
The annual investment in A.I. construction could reach over 3 percent of U.S. gross domestic product from 2025 to 2032 — a bigger annual share than what the country spent on building its railroads, electric grid and highways, according to estimates from a [working paper] by Stijn van Nieuwerburgh, a Columbia Business School economist.
I must say watching the pictures transform is truly amazing. And unlike the “dark fiber” era, this one is visible, occasionally right in your backyard.
Daelim Belefic announced today that the company is renovating a plant in the Houston Metro area. The 12+ acre property includes an an 80,000+ square foot manufacturing plant, a 23,000 square foot warehouse, and an 8,700 square foot office building.
Daelim Belefic’s U.S. CEO, Matt Rice said, “While our engineering and manufacturing capabilities are backed by decades of global experience, our future is being built alongside our American customers. We’re growing our U.S. team, expanding our operations in Houston, Texas, and strengthening our ability to serve AI data centers, renewable energy developers, utilities, industrial manufacturers, and the communities that depend on reliable power.”