Carlyle and KKR Secure $4 Billion U.S. Army Order: Two Large-Scale Data Centers to be Built at Military Bases

As conflicts in the Middle East persist, the U.S. Army's use of artificial intelligence has skyrocketed. The U.S. Army has selected private equity giants Carlyle Group and KKR to construct data centers at two military bases, with each investment estimated at approximately $2 billion. This arrangement marks a new step in the Trump administration's push to deeply integrate with the $13 trillion private equity industry. On March 26, according to the Financial Times, U.S. Army Secretary Dan Driscoll stated that the conflict in Iran epitomizes the urgent need for data centers—over the past few weeks, the volume of data processed by the Army on AI platforms has surged eightfold. Under the cooperation arrangement, the private equity firms will obtain long-term leases on the military bases and be responsible for the construction and operation of the facilities. The Army will not directly participate in the investment but will receive a specific percentage of dedicated computing power from the data centers. The report noted that both parties are currently in the negotiation phase and have yet to sign a final agreement. U.S. Under Secretary of the Army David Fitzgerald revealed that the Army's annual expenditure on data center usage has reached hundreds of millions of dollars, and future demand is expected to expand further as modern warfare technologies such as AI and drones become more prevalent. Two Data Centers to be Located in Texas and Utah According to the agreement, Carlyle will build a data center with a capacity of 2.5 to 3 gigawatts on approximately 1,384 acres of land at Fort Bliss in El Paso, Texas. The project is expected to begin operations in 2027 with an initial scale of 200 megawatts and reach full operational status by 2028. KKR, through its portfolio company CyrusOne (jointly held with BlackRock), will construct a 1-gigawatt data center on approximately 1,201 acres of land at the Dugway Proving Ground in Utah, with operations expected to commence in 2029. KKR is one of the world's largest holders of data centers. Under the framework of the agreement, the Army will receive a specific percentage of dedicated computing power from the two data centers, while the remaining capacity will be sold to commercial customers by Carlyle and KKR, creating a dual-use operational model. AI Demand Drives Military Infrastructure Transformation; Army Data Center Plan Long in the Making Explaining the background of the cooperation, Driscoll emphasized that the role of AI in modern warfare is expanding rapidly. He noted, "When soldiers face aerial and missile threats from all directions, our requirements are massive," and the computing power needed for drone swarms and launching attacks "requires a different set of infrastructure." While the conflict in Iran has further accelerated this demand, Driscoll specifically clarified that the infrastructure cooperation plan had been in development long before the outbreak of the conflict. Meanwhile, the Pentagon is currently in a dispute with AI company Anthropic over the terms of using its models. Anthropic's Claude model is the earliest known AI model to be used in classified operations, and OpenAI also signed a contract with the Department of Defense earlier this month. Beyond Data Centers: Expansion of Army-Private Equity Cooperation Driscoll stated that this cooperation model is expected to be replicated and expanded across other areas of the Army. He proposed that the Army could establish investment vehicles in the future to co-invest with private capital in mines, then transport the minerals to military bases for processing, eventually using them to manufacture weapon components. This statement indicates that the boundaries of public-private partnerships are expanding far beyond the realm of data centers. Both Fitzgerald and Driscoll stated that they expect the Army to complete more such deals.