MEMPHIS, Tenn. — Elon Musk’s xAI has been approved to lease more than 500 acres near the company’s supercomputer site in Memphis, expanding the company’s footprint in the city.
xAI recently scaled up what it bills as the world’s largest supercomputer, Colossus, at a 271-acre site in southwest Memphis, just a few months after the public found out the company was considering the city for a supercomputer site.
Now, local development officials say it’s already expanding.
“Today, On October 4th, I am happy to announce that xAI is increasing their footprint in Memphis, Tennessee,” said Ted Townsend, President and CEO of the Greater Memphis Chamber, in a post on X, the Musk-owned social media platform.
Friday, the Economic Development Growth Engine, the local development board, approved the lease with xAI affiliate CTC Property LLC for a 522-acre parcel in the Pidgeon Industrial Park near the Mississippi River in a special called meeting Friday.
“It’s going to be bringing revenue, jobs and infrastructure to Memphis, but it’s going to bring more opportunity and interest,” said Joann Massey, EDGE president and CEO.
The company would lease the site rent-free for a year, then pay $1.65 million a year, increasing by 2.5% each year, for 21 years. Two 10-year extensions are available.
At the end of the term, the company has the option to purchase the property for $23.64 million.
Brent Mayo, xAI’s senior manager over site build and infrastructure, told EDGE members the community impact will be worth it, saying he’s already held meetings with Memphis-Shelby County Schools’ superintendent, small businesses, city officials and more.
“The biggest thing for me is, is to try and understand what happens in and around the community to help build on that community,” Mayo said.
Several environmental groups Protect Our Aquifer, Memphis Community Against Pollution, and the Young Gifted and Green expressed their concerns about xAI’s impact on the city’s electricity and water usage as well as the air quality in the surrounding Boxtown area.
The group Protect Our Aquifer estimated that xAI would use about 1 million gallons of water a day from Memphis’ underground drinking water aquifer for cooling.
In August, the Southern Environmental Law Center said they had concerns about MLGW’s ability to reliably supply the needed 150 MW of power.
Mayo addressed pollution concerns, saying he lives in the community and is excited to be here.
“We protect natural resources to the greatest extent possible and leading a sustainability initiative here clearly shows we should not have a computer operating off of drinking water from the aquifer,” he said. “We’re going to kick off a wetland survey to understand in how to preserve the wetlands that are on site.”
Townsend said xAI was helping improve the city’s power grid and protecting drinking water.
“Already, the company is providing stability to the Memphis power grid by supplying mega-packs, and preserving our drinking water through sustainability efforts, like building the world’s largest ceramic-membrane graywater facility,” he said.
Also Friday, the board approved a separate lease in the same industrial park for Cardinal Energy Storage, which secured a 40-acre property for energy storage.
The project will establish a utility-scale energy storage facility, “reflecting EDGE’s commitment to supporting innovative and sustainable industrial development,” the agency said. The annual base rent will be $609,840, with a 3% annual increase.
“By activating underutilized parcels of land with innovative projects like the CTC development and Cardinal Energy Storage, we are maximizing the potential of these assets for the benefit of our entire community,” said City of Memphis Mayor Paul Young. “Establishing the foundation for long-term economic growth is part of a broader initiative to transform more areas of our city into thriving hubs of activity.”
