An investment of $6 billion remains significant, even if the development is unexpected—this model aptly represents the rapid establishment of the xAI deal in Memphis. In 2024, xAI, Elon Musk’s AI venture, made headlines by choosing Memphis for its latest project. The following weeks would shed light on the expedited nature of the xAI-Memphis collaboration—it was organized within a surprisingly brisk timeframe of 90 days.
Rarely does such impactful development unfold so swiftly, especially one laying the groundwork for the world’s most formidable supercomputer. After the initial xAI disclosure in June, the project drew a myriad of updates, inquiries, and speculations, ranging from considerations surrounding environmental impact to energy utilization.
Much anticipation surrounds how Shelby County’s infrastructure will adapt to accommodate the new xAI facility, given the significant energy requirements of the operation. A detailed investigation into the current status of the xAI project, its progress since its announcement in June, and potential forthcoming developments provide intriguing insights.
Founded in August 2023, xAI established its monumental supercomputer, dubbed ‘Colossus’, at the former Electrolux site in South Memphis, located on 3231 Paul R. Lowry Road. September 2024 saw the operational launch of Colossus, which started as a forceful machine powered by 100,000 graphic processing units (GPUs), primarily featuring Nvidia H1000 chips, the current apex of processing power in the market.
By December of that year, progress was even more impressive. During the Chamber’s annual Chairmen’s Luncheon, the company announced that it has managed to double the size of the system to 200,000 GPUs since Colossus came online. Plans were shared for the continued amplification of the supercomputer’s processing capability, expected to burgeon to approximately 1 million GPUs.
The next development phase promises to generate 320 new employment opportunities. Moreover, the robust evolution of the project appears to be captivating the attention of other heavyweight tech corporations like Nvidia, Dell, and Super Micro, who might be considering investments in Memphis.
As of January 6, there were 20 open positions at xAI based in Memphis, with 11 roles centered on data center operations. The remaining nine roles were a mix of engineering, security, and human resources functions. The xAI facility is anticipated to serve as an integral data hub for other Musk-related entities.
The establishment and planned expansion of the xAI facilities have been primarily privately financed. October 2024 marked the approval of a 21-year lease by the Economic Development Growth Engine for Memphis and Shelby County (EDGE) for Nashville-based CTC Property LLC, an affiliate of xAI, for 522 acres at the Frank C. Pidgeon Industrial Park, southeast of xAI’s current location.
These lands, currently owned by EDGE, will be subject to an option for purchase by CTC Property for $23,642,293 after the expiration of the 21-year lease. Until then, the company will pay an annual rent of $1,654,961 for the property with annual increases of 2.5% stipulated within the lease terms set by EDGE. However, there’s little clarity regarding the intended use of the leased land.
xAI has engaged in discussions with Memphis Light, Gas & Water (MLGW) and Tennessee Valley Authority (TVA) concerning its escalating energy needs that are projected to maximize at 150 megawatts. November saw the TVA board sanction a power contract for the xAI facilities with CTC Property, enabling power consumption levels exceeding 100 megawatts.
Peak energy usage of the xAI center could reach 150 megawatts, and any entity requiring more than 100 megawatts necessitates TVA approval. The facility also plans to continue relying on the Memphis Aquifer for cooling needs, with approximately 1.3 million gallons required daily. However, plans for a new wastewater treatment plant projected at $78 million are also being considered.
The second phase of the venture, notable for its expansion and growing interest from big tech firms, has been promoted by the Chamber. But the specifics of its direct impact on Memphis are yet to be disclosed. The key developments for 2025 appear to be the construction of the wastewater treatment plant and a potential substation to support xAI’s power requirements.
During an August 2024 community Q&A, MLGW confirmed plans for a new substation north of the xAI facility, accompanied by $1.7 million allocated for improvements to adjacent transmission lines. Furthermore, in January at a meeting of the Memphis City Council, the CEO of MLGW stated that the new substation should be completed by February or March, a development specifically tied to the project’s first phase. The second phase of expansion, demanding an additional 150 megawatts, is being considered in a second MLGW study.