Deutsche Telekom $DTE (-0,56%) and the leading AI chip manufacturer Nvidia are $NVDA (+2,22%) are investing billions in Munich. What is behind the plans for the huge AI data center in the English Garden?
Deutsche Telekom wants to enter into the construction and operation of data centers for artificial intelligence (AI) on a grand scale. Group CEO Timotheus Höttges announced the launch of a joint project with the US chip company Nvidia in Munich last November.
Three months later, the time has come. Together with Vice Chancellor Lars Klingbeil (SPD) and Bavaria's Minister President Markus Söder (CSU), the Deutsche Telekom CEO will open the new AI data center.
》How much money is Deutsche Telekom investing in the project?
The cloud data center for artificial intelligence requires an investment of around one billion euros. This will involve the purchase of 10,000 graphics processors from Nvidia.
This puts Deutsche Telekom in the top league of data centers in Germany.
For comparison: Germany's largest supercomputer, Jupiter, which is located at the research center in Jülich, has 24,000 graphics processors.
》Why did only three months pass before the launch?
Telekom is not building on a greenfield site, but is moving into a completely renovated existing data center in Munich, which was previously operated by Hypovereinsbank.
Little can be seen from the outside, as the data center extends over six underground floors. The building is part of the Tucherpark office quarter, which was built in the 1960s directly on the edge of the English Garden.
》What happens to the heat《
It's true: AI chips, especially Nvidia's Blackwell GPUs, get extremely hot. Telekom will use the cold water from the adjacent ice stream for cooling.
The waste heat generated in the data center will not simply be directed into the stream water. There are plans to feed this energy into the local district heating network to heat the surrounding neighborhood in Tucherpark.
》Why Telekom chose the Munich site《
Munich was chosen because it has a high density of potential industrial customers. Telekom customers and partners such as Airbus $AIR (-0,66%)BMW $BMW (-2,3%)the AI company Perplexity and Siemens $SIE (+0,31%)as well as a number of robotics start-ups such as Agile Robots require low data runtimes (latency) for their applications. By placing the computers in the middle of the city - and not in a remote business park - Telekom can meet the companies' requirements.
》Isn't the competition with large US providers like a battle between David and Goliath?
At first glance, the market position of US giants such as AWS (Amazon) $AMZN (+0,11%), Azure (Microsoft) $MSFT (-0,25%) or Google Cloud $GOOGL (-3,86%) overwhelming.
The large US companies invest many times more each year than Deutsche Telekom can afford.
Nevertheless, Deutsche Telekom still has a chance in the competition and this is due to the fact that the Bonn-based company has chosen a lucrative niche in the cloud business, namely the provision of high-security data centers close to industrial companies.
》Does Telekom benefit from Germany as a business location?
Yes and no. On the one hand, Telekom has to live with higher costs in Germany - especially for the energy supply. On the other hand, it can turn the keyword "data sovereignty" into a business model.
Many German companies are reluctant to store their sensitive data in the clouds of US providers.
Deutsche Telekom offers a "sovereign cloud" in which the data remains physically in Germany and is subject to European and German law. US providers, on the other hand, have the option of access by US authorities, at least in theory, due to laws such as the US Cloud Act.
