January twenty-seventh, two thousand twenty-five

I. Foundation 

resistance to change and hence greater dependability for the results shown in the past.

II. Insights 

Our Viewpoints and ideas on market.

The United States can no longer sustain the narrative of its technological hegemony on its own.

The Stargate project, a 5000-billion-dollar wager aimed at dominating the competition for AI infrastructure, presents a paradox:It is both inevitable and seemingly impractical. Its success depends not on technological breakthroughs, but on whether it can navigate the maze of sovereignty disputes, financial dependence, and geopolitical red lines.

The United States cannot, and will not, fund the Stargate project alone.Even with 1000 hundred million dollars in federal loans and 1250 hundred million dollars of investment from Microsoft/NVIDIA, the project’s first phase still faces a 2750-hundred million-dollar funding gap. To bridge it, the United States will have to strike a “Faustian bargain” with foreign sovereign wealth funds.These funds will trade infrastructure for equity, and capital injections for ownership of Stargate data centers. For example, the 750-billion-dollar investment proposed by MGX would give Abu Dhabi an 15% stake and control over server operations in the Middle East.

Figure: Stargate’s ownership structure

Meanwhile, SoftBank may restructure its debt through the Stargate project, with 400 hundred million dollars of related Vision Fund debt secured by Stargate project assets.In exchange, SoftBank may grant U.S. regulators access to ARM chip designs in return for looser antitrust oversight.

Stargate’s “American” branding is inherently contradictory.It depends heavily on foreign capital, whose participation inherently weakens the U.S. sovereignty interests it claims to promote.By 2030, non-U.S. entities could hold between 55% and 60% of Stargate’s equity, giving them veto power over AI Pentagon contracts and chip export policies.

On the other hand, Stargate's dependence on AI chips produced by TSMC and Samsung is as high as 80%, while those companies themselves depend on rare earth imports from China, leaving their supply chains highly vulnerable to Chinese leverage. China holds 92% of the global market for rare-earth processing, enabling it to disrupt chip production through export controls.This strategy already showed its effectiveness during the trade war in 2020. If China retaliates against U.S. technology sanctions by restricting exports of magnesium or gallium, Stargate’s supply chain could grind to a halt.

Another potential threat is data sovereignty: the G42 data centers located in Abu Dhabi are an important part of the Stargate network, but these facilities are subject to UAE law. This legal gray area means that U.S. privacy laws and export controls are difficult to enforce.

Therefore, the Stargate project reveals a harsh reality: the United States can no longer sustain the narrative of its technological hegemony on its own.By bringing in MGX and SoftBank, the United States has secured short-term capital but also faces long-term risks that could run counter to its goal of winning the AI competition. Yet this also points to a changing reality: global AI leadership no longer rests on unilateral advantage, but requires collaboration. Stargate’s ultimate legacy is that, even as the AI competition rages, capital has no borders, and power, as the new Trump administration has shown, always flows to those who control the money.

2025.01.27

III. Market Pulse 

Our latest Comments on the economic and market environment

Note: All content in this article is for reference only, does not constitute investment advice, and does not serve as a basis for any laws, regulations, or regulatory policies. Investors should not use or rely on this information as a basis for decisions.