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Jan 9 (Reuters) - OpenAI and SoftBank Group 9984.T will invest $500 million each in SB Energy to expand data center and power infrastructure for their Stargate initiative, SB Energy said on Friday.

SB Energy, a SoftBank-owned company, will build and operate OpenAI's previously announced 1.2-gigawatt data center site in Milam County, Texas.

SB Energy will also become a customer of OpenAI, using its APIs and deploying ChatGPT for employees.

Stargate is a $500 billion multi-year initiative to build AI data centers for training and inference, backed by major investors including Oracle. President Donald Trump backed the initiative when the companies announced the plan in January 2025.

Tech companies are investing directly in power infrastructure as energy access becomes a critical constraint on AI expansion, with the push for larger and more numerous data centers driving electricity demand higher.

SB Energy is developing several data-center campuses, with initial facilities expected to begin service this year.

The partnership "accelerates our delivery of advanced AI data center campuses and associated energy infrastructure at the scale required to advance Stargate and secure America's AI future," SB Energy co-CEO Rich Hossfeld said.

The data center construction boom has also prompted major players including Meta Platforms META.O to allocate unprecedented sums to infrastructure projects that require massive investments in chips, power, cooling, and servers.

Meanwhile, OpenAI faces rising expenses for training and operating its AI systems amid intensifying competition from Alphabet's GOOGL.O Google.

CEO Sam Altman told staff late last year that the company has entered a "code red" mode focused on enhancing ChatGPT, while delaying launches of other products, as it moved to counter Gemini's growing traction.

(Reporting by Deborah Sophia and Harshita Mary Varghese in Bengaluru; Editing by Tasim Zahid)

((DeborahMary.Sophia@thomsonreuters.com;))