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.
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?
Jean-Christophe Eloy
President & CEO, Yole Group
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…
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.
Jean-Christophe Eloy is CEO and President of the Yole Group.
Created in 1998, the market research & strategy consulting company has grown to become a group of companies providing marketing, technology and strategy consulting, media in addition to corporate finance services. His mission is to oversee the strategic direction of Yole Group of companies, including Yole Intelligence and Yole SystemPlus.
All year long, Jean-Christophe builds deep relationships with leading semiconductor companies, discussing and sharing information across his global network. His aim is to get a comprehensive understanding of their strengths and guide their success.
Jean-Christophe is a graduate from EMLyon Business School (Lyon, France) and has a Ph.D. in Semiconductor Engineering from the National Polytechnic Institute of Grenoble (France).
Pierre Cambou, MSc, MBA., is Principal Analyst, Global Semiconductors at Yole Group.
Pierre’s mission is dedicated to market & technology analyses of the semiconductor industry.
At Yole Group, Pierre has authored numerous market & technology products. Acknowledged as an expert in the semiconductor industry, he is regularly interviewed and quoted by leading international media.
Pierre holds an engineering degree from Université de Technologie de Compiègne (France) and a Master of Science from Virginia Tech. (VA, USA). Pierre also graduated with an MBA. from Grenoble Ecole de Management (France).
John Lorenz is Principal Analyst, Memory at Yole Group. John is engaged in in-depth analysis of the dynamic memory market and is in charge of the Yole Group’s DRAM research.
John has a Bachelor of Science in Mechanical Engineering from the University of Illinois Urbana-Champaign (USA), with a focus on MEMS devices.
Jean-Christophe Eloy President & CEO, Yole GroupIn 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…
