BUSINESS ACROSS THE BORDER
AI, or artificial intelligence, promises to be the next breakthrough in the annals of human invention, along with the automobile, the airplane and the computer.
Billions of humans use their cell phones or computers to search for everything from the nearest Italian restaurant to a list of major companies in every country. Most modern cell phones even have an AI mode as an option for searching for information, although many of us simply activate the microphone to ask questions.
How many of us have Alexa or Siri virtual assistants in our homes or offices that help us search for information in real time? This is AI in action.
Businesses are using AI in their daily operations to streamline processes, make good decisions based on information analysis, and to strengthen their workforce when the job market is tight. I have a friend in Juarez who impressed me when he showed me how he uses AI in his production and distribution operations. He is 100% betting that AI will make his business more efficient, more profitable and more competitive in the future.
Using AI, I discovered that the United States has the most data centers in the world, with 5,381. Rounding out the top five are Germany (521), the United Kingdom (514), China (449), and Canada (336). Our neighbor to the south, Mexico, ranks 11th on the list with 170 data centers.
I was surprised that the United States has such a dominant position in data centers compared to the rest of the world. In fact, using simple arithmetic, the United States has more data centers than the next 24 countries combined. It is clear that Americans demand fast and accurate information in order to make decisions in their daily lives.
Data centers are popping up in the least visible places. I recently read a Bloomberg report on how Malaysia’s palm oil producers, long cited for deforestation and pushing the animals to the brink of extinction, are now redeveloping their fields to attract data centers. This is considered a greener development approach. Malaysia has now become the fastest growing data center market in the Asia Pacific region, accounting for approximately 40% of the planned data center capacity in Southeast Asia. Over the past four years, Malaysia has received more than $34 billion in data center investments.
However, data centers are not without some concerns. They run 24/7 and the servers generate a lot of heat. They were generally water cooled. Some data centers can use over a million gallons per day just to keep servers cool and running. More modern data center projects have begun to use closed-loop cooling systems in which data center coolers are filled with water which is then recycled, thus using much less water than older systems.
The other major concern is the power required to keep data centers running constantly. According to AI, data centers currently consume about 3% of the world’s electricity. In the United States, this figure is currently 4.4%, and is expected to reach 12% by 2028. This sharp increase is aimed not only at cooling data centers, but also at powering servers.
There are also concerns about whether the entire data center industry will follow the path of the technological collapse that occurred about 20 years ago. There is a constant debate over whether data centers will continue to make individuals and businesses progressively more efficient and productive, or whether they will reach a peak where the amount invested is not worth the value they provide.
On the positive side, data centers have triggered an economic multiplier effect among companies not directly involved in their operations. A recent report indicates that French company Schneider Electric, which has major operations in El Paso, Texas, has signed two agreements to supply Switch and Digital Reality worth approximately $2.3 billion in modules, cooling systems, uninterruptible power supplies and switchgear. The multiplier effect continues in Santa Teresa, where no fewer than three manufacturers supply Schneider with the components it needs to make these data center products.
The Borderplex region – El Paso, Santa Teresa and Juarez, Chihuahua – is also benefiting from the data center boom. In northeast El Paso, Meta is building a $1.5 billion data center that, when completed, will span 1.2 million square feet and employ 100 people. As part of the $500 billion Stargate projectwhich aims to build multiple data centers across the country, Oracle and OpenAI are building four data centers in Santa Teresa, covering approximately 3 million square feet, for an investment of up to $165 billion over the next three decades. It is estimated that this project will create 750 jobs. The project will build its own micro-grid for power generation and use a closed-loop cooling system.
To put the Santa Teresa data center investment figure into perspective, in 2024 New Mexico’s total GDP was approximately $112.8 billion. According to AI, if we took all the assets held by Union Pacific, they would total approximately $137.5 billion, which is its market capitalization. It is difficult to envisage an investment of 165 billion dollars, it is staggering.
Despite concerns about data centers and their resource requirements, this bonanza is indeed happening and appears to be with us for the foreseeable future. They will play a major role in this country’s ability to compete economically on the global stage and defend its interests.