San Jose mounts challenge to San Francisco’s claim as “AI Capital”

San Jose is challenging San Francisco’s claim as the “AI Capital of the World.”

Four months after Mayor London Breed of San Francisco planted her stake to be the global hub for artificial intelligence, Mayor Matt Mahan of Silicon Valley’s largest city says not so fast, the San Jose Mercury News reported.

In a bid to lure the next generation of startups, Mahan fired off a memo to city agencies urging them to make it easier for AI companies to set up shop, while rapidly adding AI into the workings of City Hall.

“I think there’s going to be plenty of growth in AI for everybody,” Mahan told the Mercury News. “I really see us as living in a regional economy. I think San Francisco’s success can be San Jose’s success.”

In June, Breed declared San Francisco the “AI Capital” after AI firms leased dozens of offices in  the Financial District, South Beach, South of Market and on the edge of the Mission District, a bright spot in the city’s swath of vacant offices, many abandoned by tech firms.

OpenAI, maker of ChatGPT, is poised to sublease two buildings containing 455,000 square feet in Mission Bay, in the city’s largest leasing deal in five years.

The move comes after large office leases by such AI firms as cloud-based Hive, Tome, Chef Robotics, Github, Cruise, a self-driving car company and Niantic Labs, creator of the augmented reality game Pokemon Go. Anthropic, maker of the Claude chatbot, last month agreed to sublease Slack’s 230,000-square-foot headquarters in South of Market.

Venture capital funding in San Francisco rose 49 percent in the first half of the year to $82 billion, of which 30 percent went to AI firms based in the city, according to Raise Commercial Real Estate.

San Jose, however, doesn’t aim to watch the city by the Golden Gate seize the AI treasure — and aims to back its welcome mat with city support. The South Bay city has deep expertise in tech hardware and chipmaking, which support AI.

San Jose and the Peninsula are home to software and hardware giants from Intel and Cisco to Google and Meta Platforms. The South Bay also hosts research and development in chip design, AI and robotics at Stanford, SRI International and other tech brain hubs.

The mayor’s memo, co-authored by Councilman David Cohen, seeks to give discounted utility rates and speedier permit processing, along with potential tax and fee rebates, to AI firms.

Mahan said the city is looking into how AI tech could potentially cut traffic deaths, and how San Jose might use AI to find and fill the city’s potholes.

San Jose has “an immense pool of diverse talent,” Mahan said. “We want to ensure Silicon Valley stays on the edge of technological innovation.”

Gary Dillabough, co-founder of San Jose-based Urban Community, last month said he found a partner to build an incubator for dozens of artificial intelligence startups in Downtown.

— Dana Bartholomew

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