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On a $100B AI datacenter, some 60-70% of the center needs to be replaced every 2-6 years. These companies claim the hardware lasts 6 years while simultaneously

by hajile 2mo ago

On a $100B AI datacenter, some 60-70% of the center needs to be replaced every 2-6 years. These companies claim the hardware lasts 6 years while simultaneously claiming they are relying on new hardware to lower inference costs (implying much more frequent updates). Over 40 years, that's 7-20 hardware changes, that turns into between $420B and $1.4T of ongoing investment (not accounting for inflation). The $30B that is called "infrastructure" only accounts for 2-7% of the overall bill. This is NOTHING like fiber buildouts because the fiber lasts the whole 40 years with ZERO replacements and very close to 100% of the cost is infrastructure rather than a tiny percentage.

FrustratedMonky 2mo ago
I've been through several network upgrades. You are saying the fiber in the ground lasts a long time, but all the equipment on either end gets replaced every ~5 years. I agree this build out seems pretty crazy, but people were saying the same thing with the internet. Arguing if the equipment has a replacement rate of 2-6 years or 30-40 years, I think isn't the part that makes this a bubble.
- kibwen 2mo ago
  For fiber, the main costs were not the fiber itself, but acquiring the rights to lay the fiber and the labor to do so. The equipment at either end has a lifespan of somewhat less that 50 years, but that's a minor cost. Conversely, for the data centers we're talking about, the cost of the things that need replacing every five years is one of the primary costs.
  - FrustratedMonky 2mo ago
    I was responding to you mentioning fiber. But of course, the "internet" does run on servers, which also have a replacement rate. There were data centers before AI, and they had a lifespan well below 30 years. I'm not arguing that the current build out isn't crazy, just that AI isn't going away. Just like everyone thought the internet was a fad, but then it continued to grow (remember web 2.0). AI will morph into something useful and will be sticking around, even if we can't envision what it will look like.

by hajile 2mo ago

FrustratedMonky 2mo ago

I've been through several network upgrades. You are saying the fiber in the ground lasts a long time, but all the equipment on either end gets replaced every ~5 years. I agree this build out seems pretty crazy, but people were saying the same thing with the internet. Arguing if the equipment has a replacement rate of 2-6 years or 30-40 years, I think isn't the part that makes this a bubble.

kibwen 2mo ago
For fiber, the main costs were not the fiber itself, but acquiring the rights to lay the fiber and the labor to do so. The equipment at either end has a lifespan of somewhat less that 50 years, but that's a minor cost. Conversely, for the data centers we're talking about, the cost of the things that need replacing every five years is one of the primary costs.
- FrustratedMonky 2mo ago
  I was responding to you mentioning fiber. But of course, the "internet" does run on servers, which also have a replacement rate. There were data centers before AI, and they had a lifespan well below 30 years. I'm not arguing that the current build out isn't crazy, just that AI isn't going away. Just like everyone thought the internet was a fad, but then it continued to grow (remember web 2.0). AI will morph into something useful and will be sticking around, even if we can't envision what it will look like.