cross-border business
AI (artificial intelligence) is expected to be the next breakthrough in the history of human invention, on par with cars, airplanes, and computers.
Billions of people use their phones and computers to search for everything from the nearest Italian restaurant to a list of each country's top companies. Most of us simply use the microphone to make inquiries, but most modern mobile phones even have an AI mode as an option for searching for information.
How many of us have Alexa or Siri virtual assistants in our homes or offices to help us find information in real time? This is how AI works.
Companies are leveraging AI in their daily operations to streamline processes, analyze information to make better decisions, and strengthen the workforce during tight labor markets. I have a friend in Juarez, and I was impressed when he showed me how he was leveraging AI in his production and distribution operations. He is 100% betting that AI will make his company more efficient, profitable, and competitive in the future.
Using AI, we found that the United States has the most data centers in the world, with 5,381. Rounding out the top five are Germany (521), the UK (514), China (449) and Canada (336). Our neighbor to the south, Mexico, ranks 11th on the list with 170 data centers.
I was surprised to see that the United States holds such a dominant position in data centers compared to other countries in the world. In fact, using some simple math, the United States has more data centers than the following 24 countries combined: It's clear that Americans want fast, accurate information to make decisions in their daily lives.
Data centers are popping up in obscure locations. I recently read a report in Bloomberg that Malaysian palm oil producers, long accused of deforestation and pushing animals to the brink of extinction, are now converting fields to attract data centers. This is considered to be a more environmentally friendly approach to development. Malaysia is now the fastest data center market in the Asia-Pacific region, accounting for approximately 40% of planned data center capacity in Southeast Asia. In the past four years, Malaysia has received over $34 billion in data center investments.
However, data centers are not without some concerns. Servers run 24/7 and generate a lot of heat. It is usually cooled using water. Some data centers can use more than 1 million gallons of water per day just to keep servers cool and running. Modern data center projects are beginning to use closed-loop cooling systems where data center coolers are filled with water and then recirculated, significantly reducing water usage over older systems.
Another big concern is the power required to keep data centers running at all times. According to AI, data centers currently use about 3% of the world's electricity. In the United States, this number is currently 4.4% and is projected to increase to 12% by 2028. This sudden increase is aimed not only at cooling data centers, but also at powering servers.
There are also concerns that the data center industry as a whole is heading down the same path as the tech bust that occurred nearly 20 years ago. There is a constant debate about whether data centers will continue to make individuals and businesses more efficient and productive over time, or whether they will reach a peak where the investment is no longer worth the value they provide.
On the positive side, data centers have created an economic multiplier effect with companies not directly involved in their operations. According to recent reports, Schneider Electric, a French company with large operations in El Paso, Texas, has signed two contracts to supply Switch and Digital Reality with approximately $2.3 billion worth of modules, cooling systems, uninterruptible power supplies, switchgear, etc. The synergies extend to Santa Teresa, with at least three manufacturers supplying Schneider with the components needed to manufacture these data center products.
Borderplex regions (El Paso, Santa Teresa, and Juarez, Chihuahua) are also experiencing a data center boom. Meta is currently building a $1.5 billion data center in northeast El Paso that will be 1.2 million square feet and employ 100 people. As part of the $500 billion Stargate Project, which aims to build multiple data centers across the country, Oracle and OpenAI are investing up to $165 billion over the next 30 years to build four data centers in Santa Teresa, each spanning approximately 3 million square feet. The project is estimated to create 750 jobs. The project will build its own electrical microgrid for power generation and use a closed-loop cooling system.
To put the Santa Teresa data center investment into perspective, New Mexico's total GDP in 2024 was approximately $112.8 billion. According to AI, if you add up all the assets owned by Union Pacific, its market capitalization is approximately $137.5 billion. A $165 billion investment is a difficult and daunting amount to contemplate.
Despite concerns about data centers and their resource demands, the benefits are certainly occurring and appear to continue for the foreseeable future. They will be a major part of this country's ability to compete economically and protect its interests in the world.
