Washington, July 28 (V7N)- AI chip giant Nvidia is in discussions with OpenAI to provide a $250 billion lease guarantee for a massive data center project under construction in the US state of Ohio, according to a report by The Wall Street Journal.

The report said the financing would enable OpenAI to secure a long-term lease for a 10-gigawatt data center being developed in the Piketon area of Ohio. The project is being implemented by SB Energy, a subsidiary of SoftBank.

According to the report, the total cost of the project could exceed $500 billion. Of that amount, Nvidia's AI chips are estimated to account for around $350 billion. The proposed $250 billion lease guarantee would cover infrastructure leasing costs and would not include the cost of the chips.

Nvidia Chief Executive Officer Jensen Huang said discussions are also continuing regarding the supply of AI chips for the project.

The facility is expected to generate about 800 megawatts of electricity by 2028, enough to supply power to approximately 640,000 homes. The electricity is expected to come from a natural gas-fired power plant being developed under a $33 billion contract.

Earlier reports indicated that OpenAI signed a lease agreement for the data center in June with a potential duration of 20 years. Under the agreement, OpenAI would operate its own computing equipment while bearing the infrastructure costs.

Ohio has become one of the fastest-growing data center hubs in the United States. The state currently hosts 166 operational data centers, with 57 additional facilities planned, placing it behind only Virginia, Texas and California.

If completed, the project would mark a major step toward OpenAI building its own AI infrastructure. At present, the company primarily relies on cloud computing services provided by Amazon, Oracle and Microsoft.

However, some analysts have questioned the scale of the investment, noting that OpenAI has yet to become profitable.

According to the report, companies involved in providing data centers, chips and computing infrastructure had a combined debt of $96 billion as of November last year.

Alexander Tomic, Associate Dean at Boston College, said the arrangement reflects what he described as a trend of "circular financing" within the AI industry, where technology companies help finance infrastructure that ultimately drives demand for their own products.

Michael Monahan, founder of Founders ETF, disagreed with that assessment, arguing that transactions between technology companies for products and services are a normal part of business operations and should not automatically be viewed as circular financing.

Nvidia shares decline

Following publication of the report, Nvidia shares fell about 4.9 percent in midday trading on Monday.

Despite the decline, the company's long-term performance has remained strong. Nvidia shares have risen about 4 percent since the beginning of the year, 11 percent over the past 12 months and approximately 908 percent over the last five years.

Political debate over data centers

Meanwhile, the rapid expansion of AI data centers has become a political issue in several US states.

Last week, New York became the first state to approve a one-year moratorium on the construction of new data centers. Similar legislative proposals have since emerged in more than a dozen states.

Texas Governor Greg Abbott has called for restrictions on building new data centers in rural areas, while Democratic state lawmaker James Talarico has proposed ending tax incentives for such projects and requiring local approval before construction.

A recent Gallup survey found that 71 percent of Americans oppose the construction of new data centers in their local communities.

Despite growing political scrutiny, analyst Michael Monahan said he believes the long-term expansion of AI infrastructure is unlikely to be significantly affected, arguing that projects of this scale are difficult to reverse once construction is underway.

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