Microsoft mentioned it’s “slowing or pausing” a few of its knowledge heart development, together with a $1 billion challenge in Ohio, the newest signal that the demand for synthetic intelligence expertise that drove a large infrastructure enlargement won’t want fairly as many highly effective computer systems as anticipated.
The tech big confirmed this week that it’s halting early-stage tasks on rural land it owns in central Ohio’s Licking County, exterior of Columbus, and can reserve two of the three websites for farmland.
“In recent years, demand for our cloud and AI services grew more than we could have ever anticipated and to meet this opportunity, we began executing the largest and most ambitious infrastructure scaling project in our history,” mentioned Noelle Walsh, the president of Microsoft’s cloud operations, in a submit on LinkedIn.
Walsh mentioned “any significant new endeavor at this size and scale requires agility and refinement as we learn and grow with our customers. What this means is that we are slowing or pausing some early-stage projects.”
Microsoft didn’t say Wednesday what different tasks it has slowed exterior of Ohio, however in late December it revealed it was pausing the later phases of a giant knowledge heart challenge in Wisconsin.
Analysts with TD Cowen reported earlier this yr that Microsoft was additionally scaling again a few of its worldwide knowledge heart enlargement and canceling some leases within the U.S. to be used of information facilities operated by different firms.
Different analysts for months have tied a few of the adjustments to a shift in Microsoft’s shut relationship with its enterprise associate OpenAI, maker of ChatGPT.
“OpenAI was moving in one direction” by prioritizing the event of ever-more superior AI methods, which require huge computing sources to coach on troves of information, whereas “Microsoft may not have been moving that same direction,” mentioned Craig Ellis, director of analysis at B. Riley Securities.
The 2 firms introduced on Jan. 21 that they had been altering the settlement that had made Microsoft the unique supplier of OpenAI’s computing energy, enabling the smaller firm to construct its personal capability, “primarily for research and training of models.” It was the identical day that newly inaugurated President Donald Trump touted OpenAI’s partnership with Oracle and SoftBank to pledge $500 billion in new AI infrastructure within the U.S., beginning with a knowledge heart in Texas.
Microsoft has lengthy constructed knowledge facilities around the globe to run its cloud computing providers. The generative AI increase accelerated the demand for such services, each to coach new AI methods and to maintain them operating as tens of millions of individuals begin utilizing chatbots and different AI instruments at work and residential.
The computing it takes to run AI instruments is pricey and requires a considerable amount of electrical energy — a lot in order that Trump this week cited AI wants as a part of the justification for utilizing his emergency authorities to spice up the U.S. coal trade, a dependable however polluting vitality supply. Tech firms have additionally sought to faucet into nuclear energy, together with a proposed Microsoft-backed revival of the shuttered Three Mile Island plant in Pennsylvania, which might feed an electrical energy grid supplying knowledge facilities in Ohio in addition to Virginia, the nation’s greatest knowledge heart hub.
Microsoft mentioned it nonetheless plans to spend greater than $80 billion globally to broaden its AI infrastructure this fiscal yr, which ends in June, and has already doubled its knowledge heart capability over the previous three years.
“While we may strategically pace our plans, we will continue to grow strongly and allocate investments that stay aligned with business priorities and customer demand,” Walsh mentioned.
The Ohio pause however got here as a disappointment to native officers.
Licking County has additionally attracted knowledge heart investments from Microsoft rivals Google and Meta Platforms and a extremely anticipated semiconductor manufacturing facility from Intel, although the struggling chipmaker in February pushed again the anticipated completion date for the challenge’s first stage to 2030.
