AP Expertise Author (AP) — Microsoft stated it’s “slowing or pausing” some of its data center development, including a $1 billion venture in Ohio, the newest signal that the demand for synthetic intelligence know-how that drove a large infrastructure growth may not want fairly as many highly effective computer systems as anticipated.
The tech big confirmed this week that it’s halting early-stage initiatives 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 times, demand for our cloud and AI companies grew greater than we may have ever anticipated and to fulfill this chance, we started executing the biggest and most bold infrastructure scaling venture in our historical past,” stated Noelle Walsh, the president of Microsoft’s cloud operations, in a publish on LinkedIn.
Walsh stated “any vital new endeavor at this dimension and scale requires agility and refinement as we study and develop with our clients. What this implies is that we’re slowing or pausing some early-stage initiatives.”
Microsoft did not say Wednesday what different initiatives it has slowed exterior of Ohio, however in late December it revealed it was pausing the later phases of a big data center venture in Wisconsin.
Analysts with TD Cowen reported earlier this yr that Microsoft was additionally scaling again some of its worldwide data center growth and canceling some leases within the U.S. for use of data facilities operated by different firms.
Different analysts for months have tied some of the modifications to a shift in Microsoft’s shut relationship with its enterprise associate OpenAI, maker of ChatGPT.
“OpenAI was shifting in a single route” by prioritizing the event of ever-more superior AI methods, which require huge computing assets to coach on troves of data, whereas “Microsoft could not have been shifting that very same route,” stated 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 analysis and coaching of fashions.” 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 data center in Texas.
Microsoft has lengthy constructed data facilities all over the world to run its cloud computing companies. The generative AI increase accelerated the demand for such services, each to coach new AI methods and to maintain them working as hundreds of thousands 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, including a proposed Microsoft-backed revival of the shuttered Three Mile Island plant in Pennsylvania, which might feed an electrical energy grid supplying data facilities in Ohio in addition to Virginia, the nation’s greatest data center hub.
Microsoft stated it nonetheless plans to spend greater than $80 billion globally to develop its AI infrastructure this fiscal yr, which ends in June, and has already doubled its data center capability over the previous three years.
“Whereas we could strategically tempo our plans, we are going to proceed to develop strongly and allocate investments that keep aligned with enterprise priorities and buyer demand,” Walsh stated.
The Ohio pause nonetheless got here as a disappointment to native officers.
Licking County has additionally attracted data center 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 venture’s first stage to 2030.
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