The term AI factory refers to the physical data center infrastructure used to create artificial intelligence (AI) models. Distinct from AI integration in manufacturing, the phrase "AI factory" refers to the infrastructure that creates and trains large language models such as ChatGPT-4o, Anthropic, and Gemini.
The phrase has been used sporadically alongside other AI buzzwords in recent years, but it gained traction in June 2024 when Nvidia CEO Jensen Huang announced that multiple companies would build AI factories using Nvidia networking and infrastructure to drive breakthroughs in generative AI.
How does an AI factory work?
AI factories are facilities that provide the infrastructure and resources required to deploy advanced AI applications and models. AI factories serve a similar purpose to data centers and even physical factories. In the same way that factories generate products, AI factories produce intelligence, which can be used to operate AI models.
The primary purpose of AI factories is intelligence generation, with centers processing massive quantities of data to produce intelligence and update the systems they control in addition to providing outputs such as text, images, videos or audio. To accomplish this, relevant data is sent into the computing system's model, which analyzes the data and makes predictions. If these predictions are correct, the model becomes "trained" and can begin executing the specified tasks using AI inference procedures.
AI factories demand far more power, energy, and cooling solutions than typical data centers. Because these facilities are often built to analyze massive volumes of data and develop or train new algorithms, they require racks to house high-performance servers, specialized hardware accelerators, large storage systems and network infrastructures. AI factories must also be equipped with specialist hardware, such as custom-designed AI chips and GPUs, to handle relevant workloads.
While AI factories have not yet been developed at scale, various projects have been announced since 2023. As of 2024, Nvidia, the company behind some of the most advanced AI chips and GPUs, is leading the way in the development and deployment of AI factories in collaboration with Dell.