BlackRock (BLK.N) is in discussions with various governments to fund critical investments needed to support artificial intelligence (AI), including boosting power supplies. This announcement was made by the CEO of the world’s largest asset manager, Larry Fink, on Friday.
AI is expected to significantly enhance global productivity. However, it requires data centers and semiconductor plants, which consume enormous amounts of electricity.
Larry Fink addressed these concerns remotely at a meeting in Rome of the B7 business groups of the Group of Seven (G7) states. This conference took place ahead of next week’s meeting in Italy of finance ministers and central bankers from the G7’s advanced economies.
“These AI data centers are going to require more power than anything we could ever have imagined. We at the G7 do not have enough power,” Fink stated. He emphasized that this shortage presents a competitive challenge for countries.
Fink also pointed out that data centers are likely to be constructed where power supply is cheaper, necessitating state subsidies in areas with higher energy costs. This is crucial for making those regions competitive.
BlackRock estimates that the investments required to build and power these AI data centers and chip factories amount to “trillions of dollars.” Fink believes that private investors, including pension funds and insurers, could play a significant role in these investments.
On Tuesday, Japan announced that it expects electricity output to need to increase by 35% to 50% by 2050 to meet the growing demand from AI-supporting semiconductor plants and data centers.
“We’re in conversations with many governments right now about how we can bring private capital,” Fink said. He added that G7 states cannot bear the cost alone due to the risk of a “fiscal crisis.” Fink expressed concern about the increasing deficits in the G7, which he sees as a burden for future generations.