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AI supply chain term

SMR (Small Modular Reactor)

An SMR is a compact nuclear reactor built from factory-made modules, designed to deliver firm, carbon-free power at a smaller scale than a conventional plant.

What it means

A Small Modular Reactor (SMR) is a nuclear reactor with a smaller output than traditional gigawatt-scale plants, built from standardized modules that can be manufactured in a factory and assembled on-site. In the AI supply chain, SMRs are proposed as a source of firm, always-on, carbon-free electricity that can be sited near or dedicated to a data center, helping decouple buildout from strained grid interconnection timelines. Because AI clusters need large, continuous power that is hard to source quickly, hyperscalers and operators have begun signing agreements to underwrite SMR development. The trade-off is timing and cost: SMRs are largely pre-commercial, face licensing and construction risk, and will not relieve near-term power constraints, but they represent a long-dated lever over the reliable baseload that the largest AI factories require.

Why it matters to investors

SMRs are a long-dated bet on solving the power bottleneck that caps AI compute growth. Developers and their nuclear-engineering suppliers gain optionality if AI buyers underwrite reactors, but the technology is early-stage and does not ease the near-term grid constraint.

Companies on this part of the chain

Oklo Inc.OKLOMitsubishi Heavy Industries7011.T

Named to show where the term sits in the AI supply chain — research, not advice, and never a recommendation to buy or sell.

Related terms

PPA (Power Purchase Agreement)A PPA is a long-term contract in which a data center or its operator agrees to buy electricity from a specific generator at a set price and volume for years at a time.Behind-the-meter powerBehind-the-meter power is electricity generated on-site at a data center, on the customer's side of the utility meter, rather than drawn from the public grid.Data-center powerPower Usage Effectiveness — total facility power divided by IT power; lower is more efficient.BESS (Battery Energy Storage)BESS is a large-scale battery installation that stores electricity and discharges it on demand to balance supply, smooth peaks, and back up the grid.

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THE ENTITY is an educational read on the AI supply chain — research, not investment advice. It explains how the chain works and who sits where, never price targets or buy/sell calls.