Introduction to Microsoft’s Data Centre Projects
Microsoft has paused or delayed several data centre projects around the world, reflecting a recalibration of how and where it builds the infrastructure to support artificial intelligence and cloud services. Development activity has been scaled back or put on hold in countries including Indonesia, the UK, and Australia, as well as in US states Illinois, North Dakota, and Wisconsin.
Affected Projects
People familiar with the matter said the changes involve stalled negotiations or delays to construction at many sites. Microsoft’s relationship with OpenAI has positioned it as a major host for AI services, and investors monitor the company’s infrastructure investments as a signal of future demand. However, it remains unclear whether the pullback is a response to weaker-than-expected demand, supply-side constraints, or a reallocation of resources.
Impact on Tech Markets
Concerns over data centre spending have had broader effects on tech markets in recent weeks, particularly for chipmakers. Nvidia, whose products are central to AI deployments, has seen a fall in stock value of 16.9% in the year to date, and Microsoft’s stock has dropped about 9% this year. In response to inquiries, a Microsoft spokesperson said, "We plan our data centre capacity needs years in advance to ensure we have sufficient infrastructure in the right places."
Specific Sites Affected
One site affected is located between London and Cambridge in the UK, where Microsoft reportedly withdrew from talks to lease a property promoted for its suitability for Nvidia-powered infrastructure. A similar pause took place at a proposed site near Chicago. In both cases, sources familiar with the negotiations declined to be named. Elsewhere, Microsoft backed away from a deal to acquire additional capacity from cloud provider CoreWeave, according to the latter’s CEO Michael Intrator.
Global Impact
In Indonesia, construction has been paused at parts of a campus near Jakarta, while in Wisconsin, expansion efforts at a facility in Mount Pleasant have also been put on hold. The site was visited by President Joe Biden in 2023 and had already had US$262 million spent on it during early development, with roughly US$40 million allocated to concrete alone. Negotiations for a separate facility in North Dakota have also stalled.
Commitment to Existing Projects
On the positive side, Microsoft said it remains committed to its US$3.3 billion data centre project in Wisconsin, which is expected to begin operations next year. Additionally, a spokesperson in Jakarta also confirmed that the Indonesia Central cloud region is still on track to go live in the second quarter of 2025, despite pauses in construction in some areas. Microsoft projects capital spending of around US$80 billion for data centres in the current fiscal year, which ends in June.
Analyst Insights
Analyst scrutiny of AI infrastructure spending has intensified following a claim from Chinese company DeepSeek, which announced an AI model built with fewer resources than seen typically in the West. Some analysts say the development raises questions about whether future AI workloads will require less computing power. In a recent note, analysts at TD Cowen estimated that Microsoft had pulled back on projects representing about two gigawatts of potential data centre capacity in the US and Europe.
Conclusion
Microsoft’s decision to pause or delay several data centre projects around the world reflects a recalibration of its infrastructure investments. While the company remains committed to its existing projects, the pullback has raised questions about the demand for AI workloads and the future of data centre spending. As the tech industry continues to evolve, it will be important to monitor Microsoft’s infrastructure investments and their impact on the broader market.
FAQs
- Q: Why has Microsoft paused or delayed several data centre projects?
A: The reason for the pause is unclear, but it may be due to weaker-than-expected demand, supply-side constraints, or a reallocation of resources. - Q: Which countries and states are affected by the pause?
A: The affected countries include Indonesia, the UK, and Australia, as well as US states Illinois, North Dakota, and Wisconsin. - Q: How will the pause impact the tech market?
A: The pause has already had an impact on tech markets, particularly for chipmakers like Nvidia, and may raise questions about the demand for AI workloads and the future of data centre spending. - Q: Is Microsoft still committed to its existing projects?
A: Yes, Microsoft remains committed to its US$3.3 billion data centre project in Wisconsin and the Indonesia Central cloud region. - Q: What is the estimated capital spending for data centres in the current fiscal year?
A: Microsoft projects capital spending of around US$80 billion for data centres in the current fiscal year, which ends in June.
