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Viking Narrator
Viking committed to exploring the world in comfort. Journey through the heart of Europe on an elegant Viking longship with thoughtful service, cultural enrichment and all inclusive fairs.
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Victoria Craig
Discover more@viking.com hey TNB listeners, before we get started, a heads up. We're going to be asking you a question at the top of each show for the next few weeks. Our goal here at Tech News Briefing is to keep you updated with the latest headlines and trends on all things tech. Now we want to know more about you, what you like about the show, and what more you'd like to be hearing from us. So our question this week is how important are the latest tech headlines to you? If you're listening on Spotify, look for our poll under the episode description or you can send us an email to tnbsj.com now on to the show. Welcome to Tech News briefing. It's Tuesday, April 8th. I'm Victoria Craig for the Wall Street Journal. The global AI revolution is relying on roughly a trillion dollars recently pledged by America's tech titans to build mammoth data centers across the U.S. but President Trump's new tariffs could wreak havoc on those plans. Today we'll look at why some experts see the President's sweeping levies as attacks on the future of artificial intelligence. And we'll take you to a small Louisiana town that is banking on investments in this booming industry to help lift its residents out of poverty. First, President Trump's decision to slap new tariffs on American trading partners has sent a chill through US Tech companies. Over the past few trading days, shares in the so called Magnificent Seven, which include Amazon, Alphabet and Apple, have collectively shed more than $1.5 trillion in market value. While the NASDAQ Composite Index tumbled into bear market territory, the biggest source of fear for investors has been worries about the ability for tech firms to do business with the rest of the world and access critical components like microchips, which power data centers that are critical to making artificial intelligence platforms work. WSJ Pro reporter Isabel Bousquet explains that costs are likely to rise not just for critical chips, but raw materials for those big data center builds too.
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Isabel Bousquet
Isabel, a Cato Institute analyst, told you that the future of AI is now being taxed. What exactly does he mean by that?
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Analyst
When we think about AI, we think about it as something nebulous. It's software, it runs on the Internet. But what's behind AI is a lot of really expensive, complicated hardware. Every time you're using AI, there's a lot of computations happening in a physical data center, which is this large building with tons and tons of servers and the type of data center that we need to run AI, essentially, we don't have enough of them yet for the amount of AI that businesses and governments and individuals in this country want to run. So companies like Amazon, Google, Microsoft, Oracle, they're essentially racing to build these new AI optimized data centers so they'll be able to meet the amount of demand for the amount of AI compute that everyone wants to do. But like with building anything, they're going to require a lot of different materials. Materials, they come from large, complex supply chains, which in large part rely on other countries. And the issue now is that a lot of the components that they need to build these data centers are subject to the tariffs that were announced last week. Things like steel, like the building is made out of steel. Also, there's a ton of things inside the building, like sprinkler systems that use steel and electrical equipment. These data centers are now being taxed because of the tariffs.
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Isabel Bousquet
You mentioned the cost committed to building these data centers.
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Victoria Craig
Is there a risk that if this.
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Isabel Bousquet
Tariff fallout continues, if these tariffs do stick, that these lofty data center plans.
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Local Community Member
Will fall by the wayside?
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Analyst
Based on what I've heard from analysts for these companies, building these data centers is extremely, extremely important. They're kind of betting their business on the AI future at this point. And so I think for them, cost is less of an issue than maybe for some other businesses who are dealing with tariffs. I think they will spend what they need to spend in order to get these built, because it's sort of an imperative for their business to be able to deliver AI. So I don't think we're necessarily going to see them fall by the wayside.
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Isabel Bousquet
Do we have any idea how some of these big companies are preparing for higher costs or potential tariffs on semiconductors, like President Trump hinted last week.
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Analyst
They haven't been super vocal about it yet. And I think that's in part just because everything is so in flux. It's so hard to know exactly how this is going to shake out in the short term and in the long term, but I'm not sure it'll impact their plans for building for this year. I think a lot of those plans are already in motion. I think they've already secured a lot of those materials. But long term, the idea is hopefully doing more manufacturing in the US but these companies have such large, complex global supply chains, and that's just not something that changes overnight or potentially ever.
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Victoria Craig
That was Isabel Busquet, a reporter who covers tech and AI for WSJ Pro. Coming up, small town America has been willing to welcome high dollar investments from tech companies in the global air race. We'll take you to one Louisiana town depending on big tech's big bucks. After the break.
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Ann
I was never really a runner. The way I see running is a gift, especially when you have stage four cancer. I'm Ann. I'm running the Boston Marathon presented by bank of America. I run for Dana Farber Cancer Institute to give people like me a chance to thrive in life even with cancer.
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Bank of America Representative
Join bank of America in helping Ann's cause. Give if you can@b of a.com supportann what would you like the power to do? References to charitable organizations is not an endorsement by bank of America Corporation. Copyright 2020.
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Victoria Craig
A Corner of rural Louisiana has been passed over time and again when companies have gone looking for places to build manufacturing facilities. But now the artificial intelligence boom has sparked interest in areas with lots of land and power infrastructure that can be used for data farms that fuel the world's machine learning systems. WSJ reporter Jennifer Hiller visited a small town in Louisiana where Facebook parent company Meta has pledged to spend $10 billion building a new data center. For a town where a quarter of its 2,000 residents live in poverty, Meta's arrival offers enormous rewards and risks. Jennifer, tell us about Holly Ridge, Louisiana.
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Jennifer Hiller
So Holly Ridge is a small and incorporated community in Richland Parish, Louisiana. It's in the northeast part of the state. It's a farming community. This is a real rural place. It's about 45 miles from the Mississippi river. And small community, but lots of land, lots of big transmission lines and access to natural gas. And those are the things that the tech companies need these days for their big data centers.
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Local Community Member
And the state has done quite a lot to convince Meta that it's the right place for their next data center.
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Jennifer Hiller
Absolutely. Louisiana has been peddling this farmland for almost 20 years now. They were originally trying to attract some kind of big manufacturing facility like an auto plant. And you know, the community came in second place a number of times over the years for auto plants. And this data center opportunity came up and the state legislature last year passed a bill that allows sales tax exemption for data center equipment. That is a real common incentive available in probably about half the states across the country. Anywhere that has a large data center market usually has that incentive in place. So Louisiana did that and worked with the utility Entergy, which is going to be supplying power to come up with a plan for this site and also kind of helped Meta match up with a local landowner that had more land because they needed even more space.
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Local Community Member
And that's what I want our listeners to really understand is the size of this data center campus that Meta has plans to build. Can you just give us a sense of the scale?
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Jennifer Hiller
Yeah, it's just absolutely enormous. It's probably a mile wide and about five miles long. And when you're driving along it, it just seemingly goes on forever. But the facility that Meta is building will be about 4 million square feet. The project's going to cost about $10 billion. So it's roughly the size of 70 football fields. Mark Zuckerberg shared a site image of it overlaid on top of Manhattan a few months ago. And it covers a good chunk of Manhattan.
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Local Community Member
I'm wondering, how do people in the town feel about welcoming Meta? One of the biggest benefits is probably in employment.
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Jennifer Hiller
Yes, there's going to be a lot of construction jobs that come with this. They will literally have thousands of construction workers on site. So people are excited about this project. They're a little nervous about it too, because they are hoping that local people get jobs. And this isn't just construction workers that come in from other areas and are around for a while and then go back home. They are hopeful that local people will be able to get jobs, both for the construction companies that are working on the site and for Meta trying to do job training and things like that with the local community colleges.
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Local Community Member
What about worries about the strain on the power grid and Meta's agreement for how long it plans to stay in this area? Are there worries about what happens if it's just a medium term thing?
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Jennifer Hiller
The concern across a lot of Louisiana about this project is coming essentially from other utility customers. It will require a huge amount of power. Entergy is the utility and its Louisiana business wants to build about $3 billion in natural gas plants. There's also going to need to be transmission upgrades and substations and things like that built. So they have a 15 year agreement to sell power to Meta. And the concern that you hear from other residential or business customers in Louisiana is that they're simply trying to understand the risk. And they are concerned about the risk because a gas plant is something that lasts for 40 or 50 years. And so if Meta doesn't need as much power in 15 years or decides to go somewhere else, those costs would still need to be paid for and those would go to other customers in Louisiana.
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Local Community Member
And this town in Louisiana isn't the first in America's heartland to sort of change tactics from a focus on farming, maybe manufacturing, and then now to AI and big tech. You also have an exclusive story on home Homer City, Pennsylvania, that's making way for a data center campus of its own.
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Jennifer Hiller
Yes. And that one is at an old coal plant that closed down a couple of years ago and a few weeks ago they imploded it. And the plan at that site in Homer City is to build what would basically become the largest natural gas fired power plant in the country and to have a tech company, or I guess it could be a couple of companies. They haven't ironed out all the commercial arrangements and we don't know who the customer is going to be yet. But you could have a data center or maybe multiple data centers built on that same property.
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Victoria Craig
That was WSJ's Jennifer Hiller. And that's it for Tech News Briefing. Today's show was produced by Jess Jupiter with supervising producer Matthew Walls. I'm Victoria Craig for the Wall Street Journal. We'll be back this afternoon with TNB Tech Minute. Thanks for listening.