Musk's xAI, Oracle end talks on $10 billion server deal, the Information reports


(Reuters) -Billionaire Elon Musk’s artificial intelligence startup xAI and tech giant Oracle have ended talks on a potential $10 billion server deal, the Information reported on Tuesday.

The startup and Oracle have ended talks to expand an existing arrangement under which xAI has been renting Nvidia’s AI chips from the cloud provider, the report said, citing several people involved in the talks.

Musk’s xAI is building a system using Nvidia’s H100 graphics processing units by itself “for fastest time to completion”, the billionaire said in a post on his social media platform X.

The specific capacity that Oracle was talking about with xAI has been contracted to another customer, a source familiar with the matter told Reuters.

“The company is always in discussion with customers about upcoming capacity and continues to engage with xAI on its infrastructure needs,” the source said.

A multi-year agreement to rent Nvidia processors from Oracle for a planned supercomputer was underway, but talks were held back by issues such as Musk’s demands to build a supercomputer faster than Oracle deemed possible, the Information said.

Oracle also raised concerns that xAI’s preferred location had inadequate power supply, the report added.

xAI already has a contract to train AI models in Oracle’s Gen2 Cloud.

(Reporting by Arsheeya Bajwa and Jaspreet Singh in Bengaluru; Additional reporting by Harshita Mary Varghese; Editing by Anil D’Silva and Maju Samuel)



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