Musk warns of power crunch as AI drives demand for chips and data centers

Elon Musk told G20 ministers in Chapel Hill that AI could boost the global economy by up to 30%, but warned of a looming power shortfall that will require massive new generation, chips and data-center capacity.

At the G20 Innovation Ministerial in Chapel Hill, SpaceX founder Elon Musk projected that artificial intelligence could lift the global economy by roughly 20 to 30 percent over the next few years, translating into tens of trillions of dollars of annual output. He argued that the true engine of this surge would be three factors: a surge in semiconductor production, an explosion of data-center capacity, and a dramatic increase in electricity generation, warning that analysts foresee a shortfall of at least 15 gigawatts of power for AI chips by 2027.

Musk suggested that SpaceX’s plan to locate data centers in orbit could bypass terrestrial power constraints, creating a lucrative opportunity for nations that supply the needed energy and levy appropriate fees. The discussion also touched on geopolitical competition, with President Donald Trump warning that nations resisting AI data-center development would fall behind, while Musk pointed to Europe’s lagging AI sector and heavy regulatory environment as impediments to growth.

He highlighted a few European AI startups, such as Germany’s Black Forest Labs, France’s AMI Labs, and the privately held Mistral AI, noting their valuations are dwarfed by U.S. and Chinese rivals. The remarks underscored a broader call for policy shifts to enable rapid expansion of chips, power, and data-center infrastructure worldwide.