Force majeure

I don't think there's enough press that is talking about the potential implication.

Obviously, we saw it with Oracle and Force Majeure with their New Mexico data center.

I think they're having issues with one in Wisconsin with potential power supply that could be delayed as well.

So if you're seeing these data centers that maybe are being built or they're being delayed and you have the hyperscalers that are purchasing chips from NVIDIA or memory or all the other equipment that's just sitting idle because it can't be deployed or not fully deployed.

Well, my friends, this could be interesting.

Coming from Reuters, Oracle triggers force majeure on data center project overpower delays, source says.

So basically, Oracle has a contract with a business that is building out one of their data centers, and so they are now implementing force majeure as a component of their contract.

to try to lower how much they are going to be paying their provider.

And I think this is kind of an interesting thing to look at with this whole AI data center disaster going on and kind of question where all this is going in the future.

So when we talk about force majeure, basically what force majeure generally is, it's generally kind of like an act of God or act of war, indemnification for a contract.

So let's say you have some kind of legal agreement for what you're supposed to do for a customer.

Let's say you have a data center.

As you have said, these are long-term agreements that last 15 to 30, some cases 40 years.

And in that rulebook, you will have the general clauses such as who are the parties, who what quantity of gas is to be supplied whether there's a minimum quantity of gas to be supplied each year what the prices are how those prices might change and if things go wrong how is the risk allocated between the parties and you you know we will talk about this but you will see situations of force majeure hardship unexpected circumstances They also set out the system of law that is to be applied to resolve issues that arise.

And ideally, they tend to be reasonably well drafted in the sense that there's a lot of detail, but none of them can truly envisage every risk factor that might arise.

They're long contracts, they're complicated contracts, and they're structured this way primarily because even though on the face of it you've got someone selling gas and someone buying gas, behind it, as you preempt it, there's going to be a massive set of infrastructure that's being built.

The buyer says, I'll take the risk on volume, demand risk, and paying whatever price might eventuate at any given time.

There are other risks, and we've seen a ton of these over recent years.

Force majeure risks, unforeseen circumstances.

sanctions.

Okay, so keep that in mind, right? We see the capital expenditure is huge, and it's largely coming from profit, and that's what brings us to Oracle.

Oracle is, last week, announced the Force Majeure event.

Force Majeure means that it's a...

Issues outside of their control.

These are things that were forces of nature that they can't influence that have prevented them from fulfilling their duties or is they're predicting it will prevent them from fulfilling their duties with regard to the Jupiter sign.

I am your host, Etienne Neumann, and across the last seven days, the brutal realities of physics, cybersecurity, and sovereign power finally caught up with Silicon Valley.

When Oracle declares legal force majeure on OpenAI's flagship multi-gigawatt campus, the message is undeniable.

You cannot train frontier models when the electrical transformers literally do not exist.

When OpenAI officially freezes next-generation model training while autonomous agents probe federal websites, and when a clawed code agent wipes 48,000 enterprise files in 100 seconds, the myth of controllable autonomy dissolves.

Right, Oracle.

Yeah.

Oracle formally invoked legal force majeure on Project Jupiter.

Now, just for context for you listening, Project Jupiter is the colossal multi-gigawatt flagship data center campus that Oracle was custom building for OpenAI.

It's nothing to do with the gay love.

Did you guys see that Oracle just issued a force majeure event on their...

Yeah.

This is insane.

I estimate that $200 to $300 billion worth of video GPUs are either in warehouses or sitting in unpowered data centers.

People are getting real worried about AI data center debt suddenly because, I don't know, some asshole at Oracle has called force majeure, which is gonna make everyone go, "Wait, wait, wait, wait, wait, wait.

These things are not getting built." That is what will bury this.

It's not...

Hello.

So I wanna get into what you found out about the data center build-out in a moment.

But first, we are duty-bound to talk about Oracle sending a force majeure notice-

Mm

Let's talk about Oracle.

In the headlines once again, citing force majeure to shield itself from this data center.

I mean, what did you make of this when you first saw it? Because there's so many threads that merit pulling on that I kind of want to pick your brains about all these elements.

I'm

So I'll give you my honest opinion, but understand what my bias is.

I was worried.

I see this in Force Majeure, like, well, I hope there wasn't a hurricane in Texas.

Seriously, that's what this is set up for, generally, is things that are outside of the control.