MEMPHIS, Tenn. — In all the excitement about Wednesday’s announcement that xAI plans to build a supercomputer center in Memphis, there are many questions surrounding the project, like whether it will create jobs and whether tax incentives are required.
The Greater Memphis Chamber wouldn’t confirm the specific site, and said capital investment and final job numbers are still being worked out.
Chamber President Ted Townsend mentioned that the joint Economic Development Growth Engine has to sign off on the project, indicating there will be incentive requests like tax breaks.
EDGE’s VP of Operations didn’t say if those requests have been made, but stated in part, “projects of this nature bring significant opportunities for our region.”
A few months ago, X also announced a $700 million project in Atlanta, revolving around artificial intelligence at a data center there. Fulton County’s Development Authority awarded X a $10 million tax break in January for a$700 million artificial intelligence data center in Atlanta.
The county’s development board fact sheet stated the project would have a $241 million economic impact over 10 years.
The board voted to lower the company’s tax bill for a decade. It’s a tax break worth a total of $10 million, and it had an Atlanta council member fuming.
Councilman Matt Westmoreland says among the issues he had were that Atlanta’s economy would see no new permanent jobs as a result of the tax abatement.
“Many of us in Atlanta think that’s a totally inappropriate use of tax abatements,” Westmoreland said. “Tax abatements are an essential tool to help drive investment in places that may not be experiencing it or help lower housing to make it more affordable for residents to live in certain parts of town.”
The fact sheet reiterated just that, stating the Atlanta project only retained 24 high-paying jobs in the region, though it did cite 50 additional jobs relating to the project’s outfitting and installation.
While we wait to see what to expect in Memphis, Westmoreland urged the city to pay attention.
“Every time an abatement is used, the burden gets a little heavier on the people left to pay the taxes, which is why they should be used sparingly and in appropriate situations,” he said. “I am going to look back on this and wish we decided to use that 10 million in lost tax revenue to help open up a grocery store in a food desert and build hundreds of more units of affordable housing for Atlanta residents.”
Other Atlanta leaders felt differently, ultimately approving the company’s request.
Those in favor carried the sentiment that the Memphis Chamber and business leaders showed Wednesday. Supporters say a project like this creates opportunity and a multiplier effect.
“This is a transformative moment for Memphis. This is a transformative moment for the world,” Townsend said.
The EDGE board has an executive committee meeting Thursday, and a regular meeting mid-June. We’ll keep you posted.
The Chamber says the TVA will also have to sign off on the project, even though Memphis Light Gas & Water says there’s enough electric capacity on its system and TVA’s for the project.
xAI, the artificial intelligence company founded by Elon Musk, will build the world’s largest supercomputer in Memphis, Tennessee, officials announced Wednesday.
The multi-billion dollar “Gigafactory of Compute” will be the largest capital investment by a new-to-market company in Memphis history.
