Business
A.I. Computing Power Is Splitting the World Into Haves and Have-Nots
Where A.I. Data Centers Are Located
Only 32 nations, mostly in the Northern Hemisphere, have A.I.-specialized data centers.
Last month, Sam Altman, the chief executive of the artificial intelligence company OpenAI, donned a helmet, work boots and a luminescent high-visibility vest to visit the construction site of the company’s new data center project in Texas.
Bigger than New York’s Central Park, the estimated $60 billion project, which has its own natural gas plant, will be one of the most powerful computing hubs ever created when completed as soon as next year.
Around the same time as Mr. Altman’s visit to Texas, Nicolás Wolovick, a computer science professor at the National University of Córdoba in Argentina, was running what counts as one of his country’s most advanced A.I. computing hubs. It was in a converted room at the university, where wires snaked between aging A.I. chips and server computers.
“Everything is becoming more split,” Dr. Wolovick said. “We are losing.”
Artificial intelligence has created a new digital divide, fracturing the world between nations with the computing power for building cutting-edge A.I. systems and those without. The split is influencing geopolitics and global economics, creating new dependencies and prompting a desperate rush to not be excluded from a technology race that could reorder economies, drive scientific discovery and change the way that people live and work.
The biggest beneficiaries by far are the United States, China and the European Union. Those regions host more than half of the world’s most powerful data centers, which are used for developing the most complex A.I. systems, according to data compiled by Oxford University researchers. Only 32 countries, or about 16 percent of nations, have these large facilities filled with microchips and computers, giving them what is known in industry parlance as “compute power.”
The United States and China, which dominate the tech world, have particular influence. American and Chinese companies operate more than 90 percent of the data centers that other companies and institutions use for A.I. work, according to the Oxford data and other research.
In contrast, Africa and South America have almost no A.I. computing hubs, while India has at least five and Japan at least four, according to the Oxford data. More than 150 countries have nothing.
Today’s A.I. data centers dwarf their predecessors, which powered simpler tasks like email and video streaming. Vast, power-hungry and packed with powerful chips, these hubs cost billions to build and require infrastructure that not every country can provide. With ownership concentrated among a few tech giants, the effects of the gap between those with such computing power and those without it are already playing out.
The world’s most used A.I. systems, which power chatbots like OpenAI’s ChatGPT, are more proficient and accurate in English and Chinese, languages spoken in the countries where the compute power is concentrated. Tech giants with access to the top equipment are using A.I. to process data, automate tasks and develop new services. Scientific breakthroughs, including drug discovery and gene editing, rely on powerful computers. A.I.-powered weapons are making their way onto battlefields.
Nations with little or no A.I. compute power are running into limits in scientific work, in the growth of young companies and in talent retention. Some officials have become alarmed by how the need for computing resources has made them beholden to foreign corporations and governments.
“Oil-producing countries have had an oversized influence on international affairs; in an A.I.-powered near future, compute producers could have something similar since they control access to a critical resource,” said Vili Lehdonvirta, an Oxford professor who conducted the research on A.I. data centers with his colleagues Zoe Jay Hawkins and Boxi Wu.
A.I. computing power is so precious that the components in data centers, such as microchips, have become a crucial part of foreign and trade policies for China and the United States, which are jockeying for influence in the Persian Gulf, in Southeast Asia and elsewhere. At the same time, some countries are beginning to pour public funds into A.I. infrastructure, aiming for more control over their technological futures.
The Oxford researchers mapped the world’s A.I. data centers, information that companies and governments often keep secret. To create a representative sample, they went through the customer websites of nine of the world’s biggest cloud-service providers to see what compute power was available and where their hubs were at the end of last year. The companies were the U.S. firms Amazon, Google and Microsoft; China’s Tencent, Alibaba and Huawei; and Europe’s Exoscale, Hetzner and OVHcloud.
The research does not include every data center worldwide, but the trends were unmistakable. U.S. companies operated 87 A.I. computing hubs, which can sometimes include multiple data centers, or almost two-thirds of the global total, compared with 39 operated by Chinese firms and six by Europeans, according to the research. Inside the data centers, most of the chips — the foundational components for making calculations — were from the U.S. chipmaker Nvidia.
“We have a computing divide at the heart of the A.I. revolution,” said Lacina Koné, the director general of Smart Africa, which coordinates digital policy across the continent. He added: “It’s not merely a hardware problem. It’s the sovereignty of our digital future.”
‘Sometimes I Want to Cry’
There has long been a tech gap between rich and developing countries. Over the past decade, cheap smartphones, expanding internet coverage and flourishing app-based businesses led some experts to conclude that the divide was diminishing. Last year, 68 percent of the world’s population used the internet, up from 33 percent in 2012, according to the International Telecommunication Union, a United Nations agency.
With a computer and knowledge of coding, getting a company off the ground became cheaper and easier. That lifted tech industries across the world, be they mobile payments in Africa or ride hailing in Southeast Asia.
But in April, the U.N. warned that the digital gap would widen without action on A.I. Just 100 companies, mostly in the United States and China, were behind 40 percent of global investment in the technology, the U.N. said. The biggest tech companies, it added, were “gaining control over the technology’s future.”
Few Companies Control A.I. Computing
Tiles show total availability zones for A.I. offered by each company, a metric used by researchers as a proxy for A.I. data centers.
The gap stems partly from a component everyone wants: a microchip known as a graphics processing unit, or GPU. The chips require multibillion-dollar factories to produce. Packed into data centers by the thousands and mostly made by Nvidia, GPUs provide the computing power for creating and delivering cutting-edge A.I. models.
Obtaining these pieces of silicon is difficult. As demand has increased, prices for the chips have soared, and everyone wants to be at the front of the line for orders. Adding to the challenges, these chips then need to be corralled into giant data centers that guzzle up dizzying amounts of power and water.
Many wealthy nations have access to the chips in data centers, but other countries are being left behind, according to interviews with more than two dozen tech executives and experts across 20 countries. Renting computing power from faraway data centers is common but can lead to challenges, including high costs, slower connection speeds, compliance with different laws, and vulnerability to the whims of American and Chinese companies.
Qhala, a start-up in Kenya, illustrates the issues. The company, founded by a former Google engineer, is building an A.I. system known as a large language model that is based on African languages. But Qhala has no nearby computing power and rents from data centers outside Africa. Employees cram their work into the morning, when most American programmers are sleeping, so there is less traffic and faster speeds to transfer data across the world.
“Proximity is essential,” said Shikoh Gitau, 44, Qhala’s founder.
“If you don’t have the resources for compute to process the data and to build your A.I. models, then you can’t go anywhere,” said Kate Kallot, a former Nvidia executive and the founder of Amini, another A.I. start-up in Kenya.
In the United States, by contrast, Amazon, Microsoft, Google, Meta and OpenAI have pledged to spend more than $300 billion this year, much of it on A.I. infrastructure. The expenditure approaches Canada’s national budget. Harvard’s Kempner Institute, which focuses on A.I., has more computing power than all African-owned facilities on that continent combined, according to one survey of the world’s largest supercomputers.
Brad Smith, Microsoft’s president, said many countries wanted more computing infrastructure as a form of sovereignty. But closing the gap will be difficult, particularly in Africa, where many places do not have reliable electricity, he said. Microsoft, which is building a data center in Kenya with a company in the United Arab Emirates, G42, chooses data center locations based largely on market need, electricity and skilled labor.
“The A.I. era runs the risk of leaving Africa even further behind,” Mr. Smith said.
Jay Puri, Nvidia’s executive vice president for global business, said the company was also working with various countries to build out their A.I. offerings.
“It is absolutely a challenge,” he said.
Chris Lehane, OpenAI’s vice president of global affairs, said the company had started a program to adapt its products for local needs and languages. A risk of the A.I. divide, he said, is that “the benefits don’t get broadly distributed, they don’t get democratized.”
Tencent, Alibaba, Huawei, Google, Amazon, Hetzner and OVHcloud declined to comment.
The gap has led to brain drains. In Argentina, Dr. Wolovick, 51, the computer science professor, cannot offer much compute power. His top students regularly leave for the United States or Europe, where they can get access to GPUs, he said.
“Sometimes I want to cry, but I don’t give up,” he said. “I keep talking to people and saying: ‘I need more GPUs. I need more GPUs.’”
Few Choices
The uneven distribution of A.I. computing power has split the world into two camps: nations that rely on China and those that depend on the United States.
The two countries not only control the most data centers but are set to build more than others by far. And they have wielded their tech advantage to exert influence. The Biden and Trump administrations have used trade restrictions to control which countries can buy powerful A.I. chips, allowing the United States to pick winners. China has used state-backed loans to encourage sales of its companies’ networking equipment and data centers.
The effects are evident in Southeast Asia and the Middle East.
In the 2010s, Chinese companies made inroads into the tech infrastructure of Saudi Arabia and the Emirates, which are key American partners, with official visits and generous financing. The United States sought to use its A.I. lead to push back. In one deal with the Biden administration, an Emirati company promised to keep out Chinese technology in exchange for access to A.I. technology from Nvidia and Microsoft.
In May, President Trump signed additional deals to give Saudi Arabia and the Emirates even more access to American chips.
A similar jostling is taking place in Southeast Asia. Chinese and U.S. companies like Amazon, Alibaba, Nvidia, Google and ByteDance, the owner of TikTok, are building data centers in Singapore and Malaysia to deliver services across Asia.
Globally, the United States has the lead, with American companies building 63 A.I computing hubs outside the country’s borders, compared with 19 by China, according to the Oxford data. All but three of the data centers operated by Chinese firms outside their home country use chips from Nvidia, despite efforts by China to produce competing chips. Chinese firms were able to buy Nvidia chips before U.S. government restrictions.
Companies and countries throughout the world rely mostly on major American and Chinese cloud operators for A.I. facilities.
Where the World Gets Its A.I.
Even U.S.-friendly countries have been left out of the A.I. race by trade limits. Last year, William Ruto, Kenya’s president, visited Washington for a state dinner hosted by President Joseph R. Biden Jr. Several months later, Kenya was omitted from a list of countries that had open access to needed semiconductors.
That has given China an opening, even though experts consider the country’s A.I. chips to be less advanced. In Africa, policymakers are talking with Huawei, which is developing its own A.I. chips, about converting existing data centers to include Chinese-made chips, said Mr. Koné of Smart Africa.
“Africa will strike a deal with whoever can give access to GPUs,” he said.
If You Build It
Alarmed by the concentration of A.I. power, many countries and regions are trying to close the gap. They are providing access to land and cheaper energy, fast-tracking development permits and using public funds and other resources to acquire chips and construct data centers. The goal is to create “sovereign A.I.” available to local businesses and institutions.
In India, the government is subsidizing compute power and the creation of an A.I. model proficient in the country’s languages. In Africa, governments are discussing collaborating on regional compute hubs. Brazil has pledged $4 billion on A.I. projects.
“Instead of waiting for A.I. to come from China, the U.S., South Korea, Japan, why not have our own?” Brazil’s president, Luiz Inácio Lula da Silva, said last year when he proposed the investment plan.
Even in Europe, there is growing concern that American companies control most of the data centers. In February, the European Union outlined plans to invest 200 billion euros for A.I. projects, including new data centers across the 27-nation bloc.
Mathias Nobauer, the chief executive of Exoscale, a cloud computing provider in Switzerland, said many European businesses want to reduce their reliance on U.S. tech companies. Such a change will take time and “doesn’t happen overnight,” he said.
Still, closing the divide is likely to require help from the United States or China.
Cassava, a tech company founded by a Zimbabwean billionaire, Strive Masiyiwa, is scheduled to open one of Africa’s most advanced data centers this summer. The plans, three years in the making, culminated in an October meeting in California between Cassava executives and Jensen Huang, Nvidia’s chief executive, to buy hundreds of his company’s chips. Google is also one of Cassava’s investors.
The data center is part of a $500 million effort to build five such facilities across Africa. Even so, Cassava expects it to address only 10 percent to 20 percent of the region’s demand for A.I. At least 3,000 start-ups have expressed interest in using the computing systems.
“I don’t think Africa can afford to outsource this A.I. sovereignty to others,” said Hardy Pemhiwa, Cassava’s chief executive. “We absolutely have to focus on and ensure that we don’t get left behind.”
Business
Disneyland to offer $59 evening tickets next month
Disneyland Resort in Anaheim will offer $59 tickets for select evening admission to either theme park as part of a new promotion.
The one-day, one-park evening ticket offer will allow attendees to enter Disney California Adventure at 5 p.m. or Disneyland at 7 p.m. Park reservations are still required, as has been the case since the COVID-19 pandemic.
The offer only applies for admission from July 12 through Aug. 5 on Sundays to Wednesdays.
Disneyland Resort is commemorating its 70th anniversary through Aug. 9, and has introduced new shows and additions to rides as part of the occasion.
Walt Disney Co.’s theme parks and experiences business are a crucial boost to its finances, making up about 56% of the company’s operating income last fiscal year.
During the Burbank-based company’s most recent earnings call in May, Disney executives said attendance at its U.S.-based parks was down 1% compared with the prior year, a shift they attributed to “continued softness” in international visitations. However, the company said at the time that it was starting to move past those issues.
Disney’s experiences division reported $9.5 billion in revenue in that fiscal second quarter, up 7% compared with the same period a year ago, something executives said was due to higher guest spending domestically and more capacity on its cruise line.
Business
Downtown L.A. World Trade Center to become affordable apartments
An aging downtown office complex will be converted into apartments as part of an ambitious plan by local real estate companies to create 4,000 affordable housing units in Los Angeles.
The first project will be a $200-million makeover of the L.A. World Trade Center, a sprawling white elephant of an office complex on Figueroa Street built in the 1970s that will be turned into 512 apartments in one of the largest affordable housing conversions to date downtown.
Future projects being planned in the central city for delivery over the next five years will include other office-to-apartment conversions and new housing built from the ground up.
The 10-story World Trade Center, right, at Figueroa and Fourth streets in downtown Los Angeles, was built in the mid-1970s.
(Myung J. Chun / Los Angeles Times)
Behind the building campaign unveiled Monday are two of the region’s largest real estate companies, Jamison and Kennedy Wilson. Jamison is the city’s most prolific converter of offices to market-rate apartments and currently has a major makeover of a downtown office skyscraper underway for tenants who can pay top rents.
Kennedy Wilson, a real estate investment company based in Beverly Hills, owns Vintage Housing, which builds and operates affordable housing using tax credits and other state and federal financing to help fund it.
Vintage Housing and Jamison’s new affordable housing division, Arden Residential, will take on the campaign to build the housing where qualified tenants will pay rents below market rates.
Rents in the World Trade Center — which will be renamed Sky Castle when it opens in early 2028 — are expected to start at $937 for a one-bedroom unit. Some two- and three-bedroom units would rent for $1,100 and $1,300 per month, respectively, developers said.
Sky Castle will have shared amenities found in more expensive modern apartments, the developers said, such as a fitness center, resident lounge and co-working space. It already has six tennis courts on the roof, which may be converted to pickleball courts, Jamison Chief Executive Garrett Lee said.
The goal is to build higher quality affordable housing by using efficient construction methods Jamison has learned through building more than 8,000 market-rate apartments in the past, Lee said. The makeover of the World Trade Center will mark Jamison’s 15th conversion of an office building to housing.
The plan to redevelop the L.A. World Trade Center, bottom left, is one of the largest affordable housing conversions to date downtown.
(Myung J. Chun / Los Angeles Times)
The 10-story World Trade Center was built in the mid-1970s to fanfare saying it would be home to international companies. In 1976, The Times described the center as a place to prepare for an overseas trip where visitors could get passports and visas, as well as exchange dollars for francs, marks, rubles and other currency. There was a language school and branches of U.S., Swiss and Japanese banks.
By the mid-1980s, the 400,000-square-foot office complex covering a city block at Figueroa and Fourth streets had lost its international flavor and was falling out of favor with corporate tenants who were moving into glossy new skyscrapers on Bunker Hill and in other locations.
The building has been cleared of remaining office tenants to allow work to begin in August, Lee said.
Kennedy Wilson is a nationwide operator of market-rate apartments that has also moved into building affordable housing in the last decade, said Nicholas Bridges, global head of capital markets at the company.
Building affordable, workforce housing “in almost all cases requires public subsidies,” Bridges said, and Kennedy Wilson has developed expertise in assembling “a cocktail of public financing sources” that includes low-income housing tax credits and tax-exempt bonds.
In the past, many housing developers have shied away from building affordable housing because assembling the subsidies needed to make construction profitable is challenging.
An artist’s rendering shows what the L.A. World Trade Center could look like after being redeveloped into affordable housing. The new complex is to be called Sky Castle.
(Ian Camarillo)
“It’s complicated,” Bridges said, “and not for the faint of heart.”
Eligible tenants must earn between 30% and 80% of the median income in the area where the housing is built.
Jamison and Kennedy Wilson will develop about 15 affordable housing projects between downtown and the 405 Freeway, Bridges said, many of them in aging office buildings such as the World Trade Center that are already owned by Jamison and are close to public transit.
Substantial potential for affordable housing lies in L.A.’s underused office buildings, he said.
“In this post-COVID world, the way people are utilizing office buildings, particularly older office buildings, has just fundamentally changed,” he said.
It makes sense for developers of conventional multifamily housing to move to building affordable housing, Lee said, because the government supports it through subsidies, zoning reform and the fast-tracking of construction permits. The city of Los Angeles also recently streamlined its adaptive reuse rules to make it easier to convert office buildings to housing.
“There are a lot of incentives pushing us in this direction,” Lee said.
Business
Comcast is spinning off NBCUniversal media and entertainment assets
Comcast is spinning off its NBCUniversal entertainment and news media businesses into a separate publicly traded company, a move that would unwind an audacious play the cable giant made for the storied Hollywood assets 15 years ago.
The plan would put broadcast networks NBC and Telemundo, NBC News, cable network Bravo, streaming service Peacock, the Los Angeles-based Universal film and television studios, Universal theme parks and British TV service Sky in a new stand-alone company.
Philadelphia-based Comcast would remain in its core business of distributing pay-TV channels, broadband internet and wireless services.
The spinoff would be the second such move by Comcast in two years. Late last year, the Brian L. Roberts-controlled company cast off most of its cable portfolio, including CNBC, USA Network, MS NOW and Golf Channel to form a new entity called Versant.
But the maneuver failed to budge Comcast’s listless stock, which has languished for years as its primary business lost thousands of broadband customers.
Comcast executives needed to make a bolder move to mollify frustrated investors.
Comcast stock peaked at nearly $26 per share Monday before closing at $24.22, up roughly 4.5% from Friday. Still, the stock remains below its 52-week high of $34.34.
The plan announced Monday would unravel Comcast’s bold decision to acquire NBCUniversal from General Electric Co. in 2011. At the time, Comcast saw tremendous value in marrying NBC’s entertainment operations, including its then-lucrative cable channels, with its cable TV distribution service that Roberts’ late father, Ralph, launched in Tupelo, Miss., in 1963.
“They were two distinct businesses,” longtime cable analyst Craig Moffett wrote in a Monday note to investors. “Having them under the same roof didn’t make either better.”
Consumers shifted to streaming, and Comcast’s attempt to build a top-tier digital service, Peacock, has fallen well short of its goal. Peacock lags behind rivals despite billions of dollars in investment from Comcast.
The concept of unwinding its NBCUniversal operation began in earnest in the fall, when Comcast joined the bidding for Warner Bros. Discovery. Comcast executives knew they could ill afford to spend billions to buy a rival; Wall Street would have pummeled the company.
So Comcast offered to spin off NBCUniversal and pair it with Warner Bros., turning two original Hollywood studios into a new media colossus.
But 43-year-old billionaire David Ellison prevailed in the bidding, agreeing to pay $111 billion to capture Warner Bros. Discovery. Losing the auction forced Comcast to find a different path forward.
On a call with investors, Roberts said the separation would bolster the two firms as they navigate increasing competitive challenges while technology companies continue to transform entertainment.
“We asked ourselves three basic questions,” Roberts said. “One, can these businesses stand alone and have the heft to stand alone in separate companies? Two, do they have a clear, viable capital allocation path to invest? And three, is now the right time? And the answer we came back with was yes to all counts.”
A free-standing NBCUniversal, home of the “Minions” and “Jurassic Park” franchises, probably would be an acquisition target, as media companies have been consolidating in an effort to get more content and mass distribution for their streaming services. Ellison’s Paramount is on track to close its Warner Bros. purchase, which would combine such media assets as HBO Max, CBS, CNN, Paramount Pictures and Warner Bros. studios.
With its Sky business, NBCUniversal has a toehold in Britain and Europe at a time when Amazon and Netflix are flexing their global distribution muscles.
Comcast would be positioned to combine with another cable and internet provider, such as Connecticut-based Charter, which owns the Spectrum television service. Charter is in the process of buying the smaller Cox cable service, which also has operations in Southern California.
Comcast is expected to complete the spinoff next year and will retain an 19% stake in the new entity.
The timetable could put NBCUniversal up for grabs by 2028 — when the company is set to broadcast the Summer Olympics, which will be held in Los Angeles.
Comcast acquired NBCUniversal in 2011. The industry-reshaping deal combined the largest distributor of TV channels with a provider of top-rated TV channels and a movie studio. But the streaming revolution has decimated the cable television business. Traditional TV viewing has been in a steady decline over the last decade. NBC has relied heavily on NFL broadcasts, and more recently, NBA and Major League Baseball games to remain relevant.
NBCUniversal has invested heavily in its streaming service, Peacock, but has been unable to reach the scale necessary for profitability. Comcast‘s stock price has struggled as a result.
Roberts, chairman and chief executive of Comcast, will continue to be involved in the leadership of Comcast and NBCUniversal, working in partnership with the CEOs of both companies.
Mike Cavanagh will remain as CEO of NBCUniversal, and Comcast’s former chief financial officer, Michael Angelakis, will return to run Comcast after the spinoff.
“Perhaps the best part of today’s welcome announcement … is that Mike Angelakis is coming back,” Moffett, the analyst, wrote. “He will now helm the cable business, [which] is unequivocally good news. With Mike Angelakis’s return, Comcast has come full circle.”
Moffett added that, despite Monday’s announcement, the 2011 combination was not a complete bust.
“The deal to acquire NBCU from GE was financially brilliant,” he said. “It was structured so that Comcast paid for just half of the acquisition and then let NBCU’s own cash flow pay for the rest.”
Over the years, Comcast has raked in billions in profit from its media holdings.
Comcast executives on the analyst call played down the notion that the two companies were being positioned for another deal.
“Absolutely not,” Roberts said. “This is the right move to put each company in the strongest position to create value, fully monetize its assets and aggressively pursue its own organic growth strategies.”
Cavanaugh, who has been running the combined company for three years, sounded more like a buyer than a seller.
“Our plan for NBCUniversal and Sky is to build and invest for growth,” he said. “We have the freedom now to explore adjacent businesses where we have the right to play, and that’s thanks to the stability of our company and management team.”
The spinoff announcement comes a week after Fox Corp. announced its deal to purchase the streaming platform Roku for $22 billion. The deal is aimed at ensuring that Fox has a means to get its portfolio of sports, news and entertainment channels into viewers’ homes as the traditional pay-TV business continues to erode.
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