2024-08-03 10:46:24
[위클리 리포트] AI-Semiconductor Chained to Power… AI Competition Intensifies, Power Supply and Demand Emergency
Large-scale power outage at Taiwan science park… US considering withdrawal of AI incentives
Big Tech Invests in Power Infrastructure… Stocks of New Energy Companies Rise Significantly
“Economic development gap will widen significantly depending on the level of regional power infrastructure”
《Emergency to secure power for AI competition
Concerns about power shortages due to artificial intelligence (AI) are emerging as a hot topic. Power shortages are expected to become visible starting next year due to the rapid increase in data centers and semiconductor factories. The global competition to secure power to win the AI battle is also intensifying.
“My prediction that data centers would run out of power in five years was wrong. We will have a power shortage in the next 18 to 24 months.”
This is the outlook made by Mark Ganzi, CEO of global digital infrastructure company DigitalBridge, during a conference call announcing the company’s performance for the first quarter (January to March) in April. At the 2022 Berlin Infrastructure Conference, Ganzi predicted that electricity would be depleted before 2027, but he moved that point forward to the second half of 2025 (July to December) or the first half of 2026 (January to June). “Data centers and artificial intelligence (AI) are at the forefront of the global economy today,” he said, emphasizing that “the most important issue here is electricity.”
As the AI era fully opens, the issue of power supply has emerged as a new topic. As companies around the world expand data centers and build new semiconductor factories to advance AI, an emergency has been declared to secure power.
Until now, the AI competition has focused on who can secure more data and create smarter AI models. Accordingly, there has been fierce competition in semiconductors such as graphic processing units (GPUs) and high-bandwidth memory (HBM) that enable AI to learn quickly. However, it is now expanding into an infrastructure war to the point where people are saying, “We must solve the power problem to win the AI fight.”
● The world is worried about the unprecedented surge in AI power
AI, which processes massive amounts of data, is literally a ‘power-hungry hippopotamus’. While an average of 0.3 Wh (watt-hours) of power was required for each online search, generative AI models such as ChatGPT consume 2.9 Wh, which is 10 times more, per search. Image- and video-based AI, which goes one step further, consumes 40 to 60 times more power than text AI. According to the Uptime Institute, a global data center standards organization, the share of AI in global power consumption is expected to increase rapidly from the current 2% to 10% next year.
In this situation, concerns about unstable power supply are spreading in places where cutting-edge semiconductor and AI industries are concentrated. In June of this year, a large-scale power outage occurred in the Neihu Science Park in Taipei, Taiwan, a semiconductor powerhouse, where the electricity was cut off for over an hour. The Neihu Science Park is Taiwan’s core scientific base, with over 3,000 companies including AI chip specialist Nvidia and electronics manufacturers Foxconn and Wistron. The primary cause of the power outage was analyzed to be the aging power grid, but concerns are spreading that a second and third power outage will occur in the future, intertwined with the rapidly increasing demand for AI and semiconductor power.
Local Taiwanese media also pointed out that this was the power problem that Jensen Huang, CEO of Nvidia, had been worried about. Huang had previously said at Computex 2024, Asia’s largest information technology (IT) event, that “power infrastructure is a major challenge for establishing additional R&D centers in Taiwan.” According to a Greenpeace report, power consumption in Taiwan’s semiconductor manufacturing industry is expected to increase by 236% from 2021 to 2030.
In the US, there is even a movement to withdraw investment incentives promised by the state government due to concerns about the power consumed by data centers. The US state of Georgia is a representative example. In March of this year, Republican state senators and representatives demanded the withdrawal of existing data center incentives, and also passed a bill to end tax benefits for new data centers. According to the Washington Post, Georgia, which has been enthusiastic about attracting cutting-edge industries, is already experiencing a record high demand for industrial electricity this year, and anxiety is spreading.
Arizona, where TSMC is building a factory, is also in a situation where it cannot handle the increasing power demand without a large-scale upgrade of its power infrastructure. In Ohio, American Electric Power (AEP) also warned that “the burden of power supply and demand will increase rapidly due to the rapid growth of data centers and Intel’s semiconductor factory scheduled for completion in 2025.” The North American Power Reliability Corporation (NERC), an organization that monitors and oversees power infrastructure, releases a 10-year new power demand forecast every year, and last year, the figure was expanded by 2.5 times compared to 2022.
South Korea is also facing a situation where power uncertainty has not yet been fully resolved in anticipation of the creation of a large-scale semiconductor cluster. Samsung Electronics and SK Hynix are both planning to build five and four semiconductor factories, respectively, in Yongin, Gyeonggi Province, but the transmission and distribution problem of how to draw power from local power plants has not been resolved. A domestic power industry official said, “The recent addition of AI data centers has increased the risk of power supply and demand,” and “It is questionable whether the transmission network infrastructure planned now can cover both semiconductors and data centers.”
● Infrastructure is also a new food source… New businesses are flooding in
Big tech companies, which are currently in a state of crisis, are aggressively investing to secure electricity. Interest in related infrastructure companies is also growing exponentially. In particular, companies that propose new solutions such as renewable energy, nuclear power generation, and liquid immersion cooling are receiving greater attention than traditional infrastructure companies such as existing transmission and distribution and fossil fuel power generation. This is because companies must achieve their carbon reduction mission beyond simply securing electricity.
Sam Altman, CEO of OpenAI, the developer of ChatGPT, participated in a $20 million (about 27.6 billion won) investment in startup Exowatt by a venture capital (VC) in April of this year. Exowatt is developing technology that dramatically increases energy efficiency by utilizing lenses instead of large panels for solar power generation. In May, Microsoft (MS) invested $10 billion in Brookfield Asset Management’s renewable energy development project, agreeing to receive 10.5 GW (gigawatt) of renewable energy from next year to 2030. Last November, Google signed a partnership with geothermal power startup Pervo to secure power for its data centers. Since geothermal heat is generated inside the Earth, it has the advantage of being stable and not affected by the weather.
The investment market is also reflecting expectations for new energy companies. While traditional companies with a history of at least 70 years, such as AEP, Southern Company, and NextEra Energy, have seen their stock prices rise only slightly by about 10% over the past year, relatively new companies such as Vertiv Holdings, Constellation Energy, and Vistra have shown even higher growth rates, with some of them almost tripling.
Constellation Energy is the largest nuclear power generation company in the United States. It is receiving a lot of love calls from big tech companies that need to increase eco-friendly energy sources, including not only nuclear power but also various carbon-free energies such as wind power, solar power, and hydro power. Vistra is also the second largest nuclear power company in the United States and specializes in natural gas power generation. Vertiv Holdings is the world’s number one server cooling system company and is attracting attention as a company that will greatly improve power efficiency. The company’s water-cooling and immersion cooling technology is expected to greatly reduce the power consumption of data centers compared to existing air-cooling methods.
● “If you miss out on power infrastructure, you will also miss out on development opportunities”
There are concerns that the economic gap between regions with and without power infrastructure will widen significantly in the future. This is because companies will prioritize places with stable power supply and review facility and equipment investments. There are also concerns that this will lead to data centers and semiconductor factories being concentrated in certain areas, creating another supply and demand imbalance, creating a vicious cycle. Energy consulting firm Grid Strategies warned that “regions where the grid (power system) cannot keep up are at risk of missing out on economic development opportunities.”
“Everyone is now concentrating their resources on chasing electricity,” said Andy Kvengros, managing director of data center markets at global real estate firm JLL. “But this is an unprecedented situation, and power companies are at a loss as to how to address the supply-demand imbalance. It’s time to reexamine the entire system.”
Reporter Park Hyeon-ik [email protected]
2024-08-03 10:46:24