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thewayneMicrosoft has cancelled or revised data center plans to the tune of $13,000,000,000 recently, projects that were mainly for AI centers. The reason? AI/LLM is not panning out as projected. As newer models are coming out, hallucination rates are rising rather than falling. This bodes ill.
In some cases lease options are being kept and the sites will continue being used as farmland until if/when MS decides to actually build the data centers.
Meta has recently likewise started cancelling data center plans.
Article may be paywalled:
https://www.bloomberg.com/news/articles/2025-03-26/microsoft-abandons-more-data-center-projects-td-cowen-says
The Slashdot summary:
"Microsoft has walked away from new data center projects in the US and Europe that would have amounted to a capacity of about 2 gigawatts of electricity, according to TD Cowen analysts, who attributed the pullback to an oversupply of the clusters of computers that power artificial intelligence. From a report:
The analysts, who rattled investors with a February note highlighting leases Microsoft had abandoned in the US, said the latest move also reflected the company's choice to forgo some new business from ChatGPT maker OpenAI, which it has backed with some $13 billion. Microsoft and the startup earlier this year said they had altered their multiyear agreement, letting OpenAI use cloud-computing services from other companies, provided Microsoft didn't want the business itself.
Microsoft's retrenchment in the last six months included lease cancellations and deferrals, the TD Cowen analysts said in their latest research note, dated Wednesday. Alphabet's Google had stepped in to grab some leases Microsoft abandoned in Europe, the analysts wrote, while Meta Platforms had scooped up some of the freed capacity in Europe."
https://slashdot.org/story/25/03/26/1832216/microsoft-abandons-data-center-projects-td-cowen-says
Meanwhile in China, two years ago a huge data center construction boom took place in an attempt to catch up in the AI/LLM race. And then the Chinese had a breakthrough and found a way around the GPU chip embargo and discovered that there wasn't nearly as much need for huge numbers of data centers and GPU farms.
And 80% of these data centers are sitting around unused!
From the article: “The growing pain China’s AI industry is going through is largely a result of inexperienced players—corporations and local governments—jumping on the hype train, building facilities that aren’t optimal for today’s need,” says Jimmy Goodrich, senior advisor for technology to the RAND Corporation.
The upshot is that projects are failing, energy is being wasted, and data centers have become “distressed assets” whose investors are keen to unload them at below-market rates. The situation may eventually prompt government intervention, he says: “The Chinese government is likely to step in, take over, and hand them off to more capable operators.”
Something on the order of over 500 were announced in 2023/2024, which means only 100 or so are in use?! The problem was that nobody knew what they were doing with AI, but by damn, we've got to get on that bandwagon!
https://www.technologyreview.com/2025/03/26/1113802/china-ai-data-centers-unused/
In some cases lease options are being kept and the sites will continue being used as farmland until if/when MS decides to actually build the data centers.
Meta has recently likewise started cancelling data center plans.
Article may be paywalled:
https://www.bloomberg.com/news/articles/2025-03-26/microsoft-abandons-more-data-center-projects-td-cowen-says
The Slashdot summary:
"Microsoft has walked away from new data center projects in the US and Europe that would have amounted to a capacity of about 2 gigawatts of electricity, according to TD Cowen analysts, who attributed the pullback to an oversupply of the clusters of computers that power artificial intelligence. From a report:
The analysts, who rattled investors with a February note highlighting leases Microsoft had abandoned in the US, said the latest move also reflected the company's choice to forgo some new business from ChatGPT maker OpenAI, which it has backed with some $13 billion. Microsoft and the startup earlier this year said they had altered their multiyear agreement, letting OpenAI use cloud-computing services from other companies, provided Microsoft didn't want the business itself.
Microsoft's retrenchment in the last six months included lease cancellations and deferrals, the TD Cowen analysts said in their latest research note, dated Wednesday. Alphabet's Google had stepped in to grab some leases Microsoft abandoned in Europe, the analysts wrote, while Meta Platforms had scooped up some of the freed capacity in Europe."
https://slashdot.org/story/25/03/26/1832216/microsoft-abandons-data-center-projects-td-cowen-says
Meanwhile in China, two years ago a huge data center construction boom took place in an attempt to catch up in the AI/LLM race. And then the Chinese had a breakthrough and found a way around the GPU chip embargo and discovered that there wasn't nearly as much need for huge numbers of data centers and GPU farms.
And 80% of these data centers are sitting around unused!
From the article: “The growing pain China’s AI industry is going through is largely a result of inexperienced players—corporations and local governments—jumping on the hype train, building facilities that aren’t optimal for today’s need,” says Jimmy Goodrich, senior advisor for technology to the RAND Corporation.
The upshot is that projects are failing, energy is being wasted, and data centers have become “distressed assets” whose investors are keen to unload them at below-market rates. The situation may eventually prompt government intervention, he says: “The Chinese government is likely to step in, take over, and hand them off to more capable operators.”
Something on the order of over 500 were announced in 2023/2024, which means only 100 or so are in use?! The problem was that nobody knew what they were doing with AI, but by damn, we've got to get on that bandwagon!
https://www.technologyreview.com/2025/03/26/1113802/china-ai-data-centers-unused/
