The Robotification of the Warehouse Industry and Rise of AI Factories

June 19, 2024 Don Catalano Don Catalano

With the rise of e-commerce and the increasing complexity of supply chains, modern warehouses are being redefined through automation, leading to the "robotification" of the industry. 


This shift is not just about replacing human labor with machines but about integrating sophisticated AI systems that can manage and optimize warehouse tasks with unprecedented precision. 


From inventory management to order fulfillment, NVIDIA's innovations are setting new standards for modern warehouses, paving the way for a future where AI-driven processes are the norm. 


And CEO of NVidia, Jensen Huang has said this boils down to that the factories and products made inside will become increasingly robotic. Let's discuss how this will affect the warehouse industry. 


The recent evolution in warehouse space is only one part of finding the perfect property. There's a long list of requirements tenants need to check off to seal their best possible warehouse lease. So get access to the free warehouse course today where you'll learn all the information you need to simplify your search.

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NVIDIA's AI Announcement

NVIDIA's AI technology is revolutionizing the warehouse sector. The newly announced Blackwell platform is designed to support large-scale AI operations with up to 25 times less cost and energy consumption compared to its predecessors. Obviously, this is a staggering tuning-point for high-demand warehouse environments​. 


At the core of this platform is the Grace Blackwell Superchip, combining two NVIDIA B200 Tensor Core GPUs with the NVIDIA Grace CPU. This combination enables high-speed communication and processing, essential for real-time warehouse operations. 


jensen huang


The platform also features advanced capabilities, such as second-generation transformer engines and fifth-generation NV Link, which handle multi-trillion parameter AI models, crucial for optimizing and automating complex warehouse tasks​.


And essentially, NVIDIA’s AI technology drastically improves efficiency and accuracy in warehouses.

AI systems manage inventory with greater precision, reducing errors and ensuring accurate stock levels.



This helps meet customer demands promptly and minimizes costs associated with overstocking or stockouts. Automated systems powered by AI streamline order fulfillment processes, ensuring orders are picked, packed, and shipped with minimal human intervention and maximum accuracy​.


As these innovations continue to evolve, they promise to redefine the landscape of warehouse operations, making AI-driven processes the standard for the future. The "robotification" of warehouses is not just a trend but a fundamental shift that will shape the industry's future. 


warehouse automation


And as this technology is integrated, it stands to wipe out anything that was in its path.

Rise of AI Factories

The advent of NVIDIA's Blackwell platform marks a pivotal shift in the data center landscape, ushering in the era of AI factories. 


These are specialized data centers, poised to redefine the allocation and utilization of computational resources, especially for AI-centric tasks.


What Are AI Factories?

AI factories are highly specialized data centers designed to handle intensive AI workloads.


Unlike traditional data centers that host a variety of applications and serve multiple tenants, AI factories are catered to focus on limited specialties, often for a single tenant. This can better optimize their environment for AI tasks such as data processing, model training, and AI generation.


These new data centers [host] very few applications, if not one application, used by basically one tenant and it processes data, it trains models and then generates tokens and generates AI. And we call these new data centers ‘AI factories.’

-Jensen Huang


These facilities are essential for the increasing demands of AI technologies and large language models, which require immense computational power and efficiency.

And they have different size requirements.


Unlike conventional data centers that can exceed a million square feet, AI factories are much smaller, typically around 10,000 square feet. This compact size is necessary to manage the high power and cooling needs efficiently. But also, AI factories exhibit power densities five to ten times greater than traditional data centers. This is due to the significant energy requirements of AI processing tasks.


“They are going to be smaller because you can't build a 700,000 sq ft AI data center. The power that would be consumed by that thing would just be monstrous."

-Data Center Knowledge


Will AI Factories be Ubiquitous? 

Because of low size requirements and increasing demand pressure… AI factories will be everywhere. This is also because of the inherent flexibility of the AI factory model. 


“We're seeing AI factories being built out everywhere. And my guess is that almost every major region will have and surely every major country will have their own AI clouds. And so, we're at the beginning of this inflection, this computing transition."

-Data Center Knowledge


And because they don’t need the massive square footage of data centers, AI factories are more likely to be in urban environments. While we can see a data center that spans over a million square feet in the middle of America where land availability is the name of the game, that's not the case.


Also, many urban locations already have robust power infrastructures capable of supporting the high-power demands of AI factories. This eliminates the need for extensive new power installations, making urban settings practical for these high-density facilities​.


ai factory


Cities often have superior networking and internet connectivity, which is essential for the high-speed data transfer requirements of AI operations. This connectivity ensures that AI factories can operate efficiently and effectively.


“Whereas giant data centers tend to be developed in remote areas next to renewable energy sources, AI factories could be situated in downtown or big-city areas and in existing facilities that have lots of power available,” according to Data Center Knowledge. 


Urban areas often have a surplus of underutilized office and retail spaces. These spaces can be repurposed to house AI factories, making efficient use of existing infrastructure without the need for new construction.

Urban regions may offer regulatory advantages and economic incentives to attract tech investments. These can include tax breaks, grants, and streamlined permitting processes, making it financially attractive to set up AI factories in cities. And when office-to-retail conversions are still too expensive, any solution is welcome. The drain on cities from empty office buildings has had notable consequences. Read more about the Urban Dystopian Spiral.


“Right now, there's tons of underused office and retail space,” Farney said. “What becomes very, very attractive is an abandoned building or underused building an urban space, or a part of an old warehouse in the middle of nowhere, that already has power where you can plunk down some AI gear, some liquid cooling and plug in and go.”

- Data Center Knowledge


And with all the circumstances lining up to make the integration of these new facilities as seamless as possible, huge names in Tech are jumping at the opportunity to get on board. Leading companies like Amazon Web Services, Google, Microsoft, and Tesla are at the forefront of adopting AI factories.


John Sasser, the Chief Technology Officer at Sabey Data Centers, a US-based data center operator, highlights a notable increase in the proportion of total demand originating from various AI-focused companies. These companies typically exhibit similar traits such as substantial demand, high density, utilization of liquid cooling, and a preference for flexible data center locations.


And as AI continues to take over the world, we’re likely to see such facilities even more.


Tenant Takeaways

New advancements are set to flip the warehouse industry on its head. As factories adopt robotic technology, laggard properties are set to be extremely devalued. Because for one, they will simply not be able to keep up with an AI-enabled, seamless workflow.


The full implications of such novel technology are yet to be realized. But for corporate tenants, it is critical to remain on the cutting-edge of developments. Warehouse demand is set to canonically shift towards extremely modernized facilities. And with the possibility to revamp urban centers with new standards of commercial real estate, there is no telling how far-reaching the effects of AI integration will be.


The recent changes in warehouse space are just one aspect of securing the ideal property. Tenants must meet a comprehensive list of requirements to secure the best warehouse lease. Enroll in the free warehouse course today to gain all the knowledge necessary to streamline your search. 

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