Nvidia’s Workaround For Data Center Backlash: Retrofitting Old Telephone Buildings

Nvidia is looking for a faster way to get its chips turned on: old telecom company buildings.

The chip designer has approached private equity firm Apollo Global Management about creating a network of small AI data centers potentially spanning 20 states across the U.S., using existing buildings of a struggling telecom firm, according to two people with direct knowledge of the effort.

Such a project could help Nvidia and its customers find alternatives following Tuesday’s election of U.S. gubernatorial candidates, including in the all-important state of Texas, who have called on moratoriums on new data centers and other regulations. Retrofitting existing buildings with AI servers could help these companies avoid some of the forthcoming red tape.

The telecom-facility project took on greater urgency in recent weeks, as Nvidia pursued a plan to repurpose the assets of Brightspeed, an Apollo-owned broadband internet service provider that is reportedly nearing bankruptcy, the people said. Brightspeed operates more than 130 buildings that contain equipment for managing voice and data traffic but many are already wired with enough power to run Nvidia’s latest servers, the people said.

Nvidia initially floated the idea to Apollo executives, who asked the chipmaker to submit its plans in writing to Brightspeed, according to a third person briefed on the project. Nvidia on Wednesday submitted a proposal and request for additional information, data, and field visits to several sites to Brightspeed, the person said.

Nvidia has determined that Brightspeed’s disparate buildings have roughly 1 gigawatt of available power, according to one of the people with knowledge of the effort. That power could potentially run tens of billions of dollars worth of Nvidia Vera Rubin chip systems.

Nvidia staff have talked to suppliers about retrofitting some of the Brightspeed buildings with racks of Vera Rubin servers starting in the first quarter of 2027. The plan could also involve installing technology from Groq, the AI chip startup whose technology Nvidia licensed late last year, said the two people with direct knowledge.

Upgrades to such facilities, including adding specialized cooling systems for the chips, would likely still require some local government permits or approvals, but fewer than building the facilities from scratch.

It isn’t clear who will buy the Nvidia chips for the Brightspeed facilities. But Apollo recently agreed to purchase tens of billions of dollars of Vera Rubin chips, which it will lease to SpaceX, making Apollo one of the world’s biggest buyers of AI server chips.

Nvidia representatives have described the proposed Brightspeed data centers as an “inference network,” one of the people said. That term implies the network would power existing AI models rather than help companies develop new models, which typically require a larger, concentrated cluster of chip hardware. Specialized software would help the new owner manage the disparate servers.

Customers of these eventual facilities could be cloud providers and AI developers such as SpaceX, Anthropic and OpenAI. Those companies have been desperate to find additional Nvidia servers to power their businesses amid a server supply crunch and fears of a shortage of power for new facilities. It isn’t clear whether Nvidia or Apollo is talking to those potential customers about the proposal.

Anthropic’s Power Hunt

Retrofitting old buildings takes advantage of power that would otherwise be underutilized, said Zac Smith, CEO at AI networking startup Datum and longtime cloud executive. But these facilities can also sometimes be more expensive to operate than newer facilities because they might have older, less efficient electrical equipment.

Despite such disadvantages, Smith has seen “old telco people” working to retrofit “crappy telco data centers from the ’80s” due to rising demand from cloud firms and AI developers over the past couple of months.

Lately, Smith said, companies such as Anthropic have been asking him where they could find pockets of 5 to 10 MW of power capacity in older buildings, he said. Anthropic in particular has told potential investors that a shortage of servers is among the top risks its business faces, and it has accelerated commitments to lease facilities or servers from cloud providers and data center developers to the tune of hundreds of billions of dollars.

It isn’t clear exactly how many of the Brightspeed buildings Nvidia wants to retrofit. Many are located in smaller cities such Dothan, Ala., Killeen, Texas, and Mansfield, Ohio. Brightspeed was formed in 2022 after Apollo bought some of telecom firm Lumen Technologies’ local telephone business and broadband assets for $7.5 billion.

While the Brightspeed retrofits have taken on added significance since Tuesday’s midterm elections, they also appear to be part of an Nvidia strategy to lock up data center capacity and use up available power for its AI hardware before its rivals do. Nvidia also has made investments in firms that secure power rights and land for new data centers could help Nvidia head off what some data center developers fear is a looming chip overhang in which energy grid delays and local political pushback leave AI hardware sitting idle without electricity.