Some Memphis City Council members are concerned the factory will interfere with the city's water and power supply.
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The Greater Memphis Chamber publicly announced last month that Elon Musk would build xAI's "gigafactory of compute" in the Tennessee city.
The facility will house what Musk intends to be the world's most powerful supercomputer, which will power xAI's chatbot Grok. Musk has expressed a goal for Grok to be the "funniest" chatbot and eventually summarize the news on X, formerly Twitter.
At the time of the announcement, the partnership was still pending approval from the Memphis Shelby County Economic Development Growth Engine, Tennessee Valley Authority, and other governing authorities.
Since then, the project has received pushback from some Memphis City Council members who have cited concerns with the project interfering with the city's water and power supply, according to a new report from Forbes.
Councilmember Pearl Walker told Forbes that the development caused "hysteria" among Memphis locals.
"People are afraid. They're afraid of what's possibly going to happen with the water and they are afraid about the energy supply," Walker also said at a Memphis Light, Gas, and Water meeting on Wednesday, according to the report.
Forbes reports that the data center is expected to require 1.3 million gallons of water per day from the county's main water supply, though xAI has a verbal agreement to create a new power substation and a greywater processing facility, which could change that.
This isn't the first time concerns around the project's impact on the surrounding area have been voiced. A group of three Memphis environmental groups also expressed concerns about the factory's impact on local power supply in an open letter shared on X, formerly Twitter. The letter mentioned concerns about the city's ability to maintain power through "severe weather events and rolling blackouts," with a facility requiring so much power in the area.
xAI's factory will need 150 megawatts of electricity to power its factory, which is roughly the amount needed to power 100,000 homes, the letter said. Memphis Light, Gas and Water is reportedly making efforts so that the factory doesn't impact the local power grid, according to local publication Commercial Appeal.
Musk's future computing gigafactory isn't the only AI data center that requires large amounts of power. Meta's 2023 environmental data report revealed a facility in Iowa burns the equivalent of 7 million laptops running eight hours a day, according to a report from the Washington Post.
AI data centers are driving a surge in US electricity demand and could exceed supply within two years at the current pace, according to Bernstein Research. A Goldman Sachs report revealed a single ChatGPT query uses nearly 10 times the amount of electricity needed for a Google search.
Still, the concerns haven't stopped Musk from moving forward with the plan as he looks to compete in the AI arms race with rivals such as OpenAI and Meta. Construction began almost immediately after the deal was finalized in March, according to the Forbes report.
Ted Townsend, the president of the Greater Memphis Chamber, told Business Insider at the time of the announcement that the city was chosen because it had an "ideal site" and could keep up with Musk's aggressively fast pace in completing the project.
The billionaire has previously shared plans to have the supercomputer running by fall 2025, although many of his estimates have been overly ambitious and have been pushed back in the past.
xAI did not respond to a request for comment.
