Elon Musk’s artificial intelligence startup, xAI, has expanded its presence in Memphis, Tennessee, by purchasing a 1 million-square-foot property to build what could become the world’s largest supercomputer, in line with previous commitments. The purchase price has not been disclosed.
xAI’s Latest Expansion Move
According to a statement released by the Greater Memphis Chamber of Commerce on March 7, xAI acquired a 1 million-square-foot property in southwest Memphis. This move follows the company’s December 2024 announcement to expand its supercomputer, Colossus, in the city.
The Chamber stated that the new facility would complement xAI’s existing operations and serve as the first step in expanding the Colossus supercomputer, a project that Memphis has been preparing to host since August 8, 2024.
To support its long-term expansion, xAI has leased hundreds of acres in Frank C. Pidgeon Industrial Park, where it will continue to develop its core operations in the coming years.
“The increased investment in xAI strengthens the ‘Digital Delta’s’ influence and commitment to innovation,” the Chamber said. “Having xAI permanently in Memphis will enable the city to actively participate in the global AI race among major tech centers.”
Beyond its own operations, xAI’s expansion is expected to:
- Create hundreds of new jobs in Memphis.
- Attract other major AI and tech companies to the region.
- Boost Memphis’ local economy and position it as a leading AI hub.
The Colossus Supercomputer & AI Expansion
Currently, the Colossus supercomputer runs on 200,000 Nvidia chips, but xAI plans to add 125,000 more H100/H200/GB200 chips later in 2025.
“Supercomputers are moving toward supercluster scale,” the Chamber noted, adding that Colossus is expected to run on 1 million chips by 2026. Once fully operational, Colossus will consume 300 megawatts of electricity.
However, the high energy consumption of AI data centers has sparked concerns from environmental groups.
To address sustainability concerns, xAI has leased 13 acres to construct an $80 million water recycling facility, called the Colossus Water Recycle Plant. This initiative aims to reduce pressure on Memphis’ aquifer and save 4.75 million gallons of water per year.
Full Confidence in Expansion
In December 2024, xAI confirmed plans to expand Colossus with an estimated GPU count exceeding 1 million. As part of this expansion, NVIDIA, Dell, and Supermicro Computer (SMC) are setting up operations in Memphis to collaborate on AI infrastructure development.
The move strengthens xAI’s position in the competitive AI race against rivals like OpenAI and Anthropic. xAI’s generative AI model, Grok, has become a major feature of the X (formerly Twitter) platform and is expanding into consumer and developer applications.
Tesla, SpaceX & AI Integration
As part of xAI’s broader vision, the company plans to integrate data resources between Tesla, SpaceX, and other Musk-led ventures. This could significantly accelerate R&D efforts, particularly in Tesla’s autonomous driving technology. The upgraded Memphis data center is expected to play a key role in enhancing Tesla’s AI-powered self-driving systems.
The Power of Grok 3 & xAI’s Financial Backing
Recently, xAI unveiled its latest AI model, Grok 3, which Musk has called “the smartest artificial intelligence on the planet.”
- Grok 3 is 10x more powerful than its predecessor, Grok 2.
- A beta version of Grok 3 is available to X Premium users.
Backing this expansion, xAI raised $6 billion in Series C funding in December 2024, valuing the company at $40 billion. To date, xAI has secured $12 billion in total funding, which will drive:
- Further AI advancements.
- Continued development of Grok.
- Scaling of the Memphis data center project.
Summary
- xAI purchased a 1 million-square-foot property in Memphis for supercomputer expansion.
- The Colossus supercomputer will scale to 1 million chips by 2026.
- xAI is investing $80 million in water recycling to reduce environmental impact.
- NVIDIA, Dell, and SMC are joining xAI in Memphis to build a global AI hub.
- Tesla will use the Memphis data center to enhance autonomous driving AI.
- Grok 3, xAI’s latest AI model, has launched for X Premium users.
- xAI secured $6 billion in funding, valuing the company at $40 billion.
With Memphis becoming a new AI powerhouse, xAI’s expansion could reshape the city’s technological landscape, strengthening its role in the global AI ecosystem.
