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Texas has become the new Silicon Valley – here’s why

  • elocal magazine By elocal magazine

At the advent of his second term in office, Donald Trump announced his intention to transform the US into “the world capital of artificial intelligence (AI)”.

The great American AI revolution will begin, he declared, with Stargate, the largest project of its kind “by far in history”.

The joint venture between tech firms OpenAI, SoftBank and Oracle, will invest $500 billion (£405 billion) in AI infrastructure over the next four years.

But rather than California’s Silicon Valley, Texas will be home to the venture.

According to Larry Ellison, the chief executive of Oracle, 10 data centres are already under construction in the state, 10 more are on the way, and the project’s first one million-square-foot data centre will be based in Abilene in western Texas.

“He is helping to make Texas the leader in the world in technology,” said Rep Giovanni Capriglione, a Texas Republican and former California tech worker.

The race to develop AI was given fresh impetus this week with the release of DeepSeek, a Chinese chatbot that purports to outperform US rivals, despite being developed for a fraction of the cost.

Described as AI’s “Sputnik moment”, the launch of DeepSeek knocked almost $600 billion off the market value of Nvidia, America’s largest AI chipmaker, with Mr Trump saying it should be a “wake-up call” for US tech companies.

The move to build Stargate outside Silicon Valley is the latest sign of Texas’s growing stature as a tech powerhouse, and followed Mark Zuckerberg’s announcement earlier this month that Facebook will move some of its teams to the Lone Star state as part of a drive to restore freedom of speech on the platform.

With China vying for AI supremacy, speed is of the essence to ramp up development in order to establish US national and economic security.

The pull of the Lone Star state

Possessing its own power grid free of supervision from FERC, the federal regulator, Texas can build new transmission lines almost two years faster than any other state in the nation, Ms Stricker said, making it the ideal location for new data centres.

“I think California tech people have realised that they’re really Texans at heart,” said Mr Capriglione, adding that heavy regulation and expensive fines had turned entrepreneurs away from the Golden State.

In California, he said, “they force companies to spend more time and more energy on compliance than developing innovative project products”.

He added that Texas’s tax-friendly policies (it has no state income tax or capital gains tax) had also lured entrepreneurs, making it “significantly less expensive” to set up shop in the state.

“My home is cheaper than my New York one-bed apartment,” quipped Sean Kelly, the chief executive of Amperon, an energy forecasting startup.

Mr Kelly founded the firm in 2018 but later moved to Texas owing to lower business costs and light-touch regulation.

“If you run a successful startup [in New York], you get taxed at a premium rate, which is not advantageous to you staying there,” he said.

Mr Kelly sits on the tech committee of the Greater Houston Partnership and said he saw “a ton of people moving here from California”, with very few entrepreneurs migrating the other way.

‘Backbone of next wave of tech innovation’

Addressing the president’s decision to bank on Texas for his new AI plans, Mr Kelly said: “Stargate is absolutely bullish for our economy,” adding that it would boost jobs and infrastructure and draw in the best engineering talent.

He continued: “Texas is definitely being positioned as the backbone of the next wave of tech innovation.”

Elon Musk has railed against the Left-wing policies of Gavin Newsom, the governor of California, and last year moved the headquarters of X and his rocket company SpaceX from the West Coast to Texas after the governor signed a pro-trans measure into law.

The Tesla billionaire, who has been appointed by Mr Trump to lead the new Department of Government Efficiency, is said to view the state as something of a utopia and is reported to be planning to build his own town outside Austin, as well as a university.

When Mr Musk announced X and Space X’s relocation, Ted Cruz, the Texas senator, said he was “proud to welcome” the billionaire, while the state’s governor Greg Abbott, a Trump ally, said the move “cements Texas as the leader in space exploration”.

Mr Trump has publicly feuded with Mr Newsom, whom he frequently calls “Newscum”, and has claimed people are being “forced to leave” the state because of his “insane policy decisions”.

The pair temporarily buried the hatchet on Friday when Mr Trump flew to California to assess the damage caused by recent wildfires which killed dozens of people and burned down more than 12,000 homes.

The president has been highly critical of offshore wind turbines – an energy source in which California has invested billions of dollars – and signed an executive order last Monday blocking new wind projects.

Mr Trump said that windmills “ruin your neighbourhood” and has previously described them as an economic and environmental “disaster”.

The policy will serve a blow to California’s energy production goals, raising further questions about Silicon Valley’s ability to house the data centres needed for the AI revolution.

Addressing the tech world’s embrace of Mr Trump, Mr Capriglione said: “Texans value family, conservative government and freedom. Those are values that most people in America hold.

“What these other states are finding out is that if they don’t provide that same ability for people to be free, and to exist outside restrictive government, they will go elsewhere.”


Telegraph Media 

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