This market research report was originally published at the Yole Group’s website. It is reprinted here with the permission of the Yole Group.
The announcements of the creation of Stargate last week as well as the revelation of DeepSeek-V3’s performance at a much lower cost than OpenAI and its competitors are both raising a lot of questions.
This article is based on Yole Group’s collection of products, including Overview of the semiconductor device industry 2025-H1,Semiconductor Trends in Data Centers 2024 (2025 edition coming soon), Generative AI 2024 – Impact on Processors, Memory, Advanced Packaging, and Substrates (2025 edition coming soon)…
Is Stargate really new money?
Concerning Stargate, a large portion of the $500 billion investment is certainly included in already announced investments, rebranded under the Stargate initiative: the cumulative investment of Microsoft, Google, and Meta for data centers supporting AI development was already above $200 billion as of 2025, so $500 billion within the next 5 years is not a significant change in momentum, more a sustaining effort of an existing trend, more or less doubling down on what is already in the pipeline in terms of capex.
What could be the governance of this future Stargate venture?
What is new – and raises a lot of questions – is that the $500 billion will be under the umbrella of a company mainly owned by OpenAI, Oracle, and Softbank, as well as MGX: what will be the governance structure of this company? How will Microsoft, Meta, Google, Apple… agree on such an overarching company managed by Softbank, Oracle, and Open AI, all with multiple goals and engagements competing with their own strategy?
“In this regard, we can mention Arm’s deep links with Softbank, the substantial investment and/or collaboration of these companies in competition with Open AI products and developments, Apple’s own internal developments, and multiple other challenging situations. The decision on how to invest the $500 billion and on which technologies and strategies will be challenging to manage…”
Jean-Christophe Eloy
President and CEO, Yole Group
What will be Stargate’s business model?
Another key question is the business model: defining an ROI on the $500 billion to be spent on a viable business model is not simple and possibly not worth it at all if one considers the companies involved in this investment. Will the company go beyond building and managing data centers to supporting AI model training and selling their use to external customers? Will the company also develop AI models to support specific customer needs? What about the potential ASIC AI development that is key to the performance of the data centers?
DeepSeek is changing the game
The announcement of DeepSeek is a shock to the AI ecosystem and reinforces the questions about Stargate. Deepseek-V3 purports to be comparable to the performance of OpenAI at a fraction of the cost for training and inference. It highlights that, like countless technologies before it, competition is a key ingredient in the development of AI. And not just among the hardware suppliers or model developers – competition is needed across the whole AI supply chain to drive innovation, different thinking, and optimization of resources, including the energy required to run the model. Longer-term, new applications and startups will benefit from even lower-cost AI, and perhaps DeepSeek just revealed a shortcut to achieving this. The natural move for Nvidia, OpenAI, Oracle, and Softbank will be to preserve and reinforce their competitive advantage, which could place them in opposition to Stargate’s goal of US leadership in this new technology. DeepSeek’s achievement shows there could be other ways to spend $500 billion…
At Yole Group, we will thoroughly examine the impact of this announcement on the semiconductor industry in the coming weeks and offer high-value analyses considering all stakeholder moves.
Stay tuned at www.yolegroup.com and follow us on LinkedIn for up-to-date insights!
