Dylan Patel says China has gigawatt-scale AI campuses comparable to Abilene, and that their speed, scale, low cost and vertical integration are astonishing.
China has campuses on a similar scale, though few people outside the country have had a look inside. In September, we visited one, and we found the speed, scale, ultra low cost, and deep vertical integration astonishing.
Dylan Patel thinks vertical integration does not yet win hyperscaler orders in China, but could matter more as power gets scarcer and power architectures change.
It is too early to say whether vertical integration will become a meaningful advantage in China’s datacenter market. For now, it gives integrated players more control over cost and schedule, but hyperscalers still choose vendors mainly on resources and track record. That could change as power becomes harder to secure and the power system inside the datacenter is redesigned.
Dylan Patel argues energy access is becoming part of what datacenter developers sell, and power architecture is shifting to high-voltage DC with batteries replacing UPS.
Across different markets, access to energy is becoming part of what a datacenter developer sells. Second, the power architecture from the grid connection to the rack is being redesigned. In the US, the industry is moving toward higher-voltage DC power, while battery backup units (BBUs) and BESS are starting to take over the role of UPS.
Dylan Patel notes China's datacenter market is fiercely competitive, with rents halved, capex down 25%, and Inner Mongolia power among the world's cheapest.
China’s datacenter market is highly competitive. Rents have roughly halved over the past five years, to about $40/kW/month excluding power. Capex has fallen about 25% over the same period, to less than $3mm per MW. Power in Inner Mongolia costs about $0.055/kWh all-in, among the lowest in the world.
Dylan Patel warns that bureaucracy at NVIDIA is slowing its response to the open-source community and is among the biggest risks to its software moat.
There needs to be an cultural shift in massively reducing bureaucracy at NVIDIA. This is one of the biggest risks to NVIDIA Moat that Jensen has to tackle. In our experience and many customers experience, Nvidia is now slower moving than AMD, Google, and Amazon to external suggestion, git commits, and feedback.