Microsoft announced that it is “slowing or pausing” some of its data center building, including a $1 billion project in Ohio. This is the most recent indication that the vast infrastructure expansion that was prompted by the need for artificial intelligence technologies may not require as many powerful computers as initially anticipated.
In Licking County, outside of Columbus, in central Ohio, the tech giant announced this week that it is stopping early-stage projects on rural land it owns and will set aside two of the three locations for farmland.
According to a LinkedIn post by Noelle Walsh, the president of Microsoft’s cloud computing operations, “We started executing the largest and most ambitious infrastructure scaling project in our history to meet this opportunity as the demand for our cloud and AI services grew more than we could have ever imagined in recent years.”
According to Walsh, any major new project of this magnitude and scope necessitates flexibility and improvement as they develop alongside their clients. This indicates that certain early-stage projects are being slowed down or put on hold.
Microsoft announced in late December that it was halting the last stages of a massive data center project in Wisconsin, but it did not specify Wednesday which other projects outside of Ohio it had slowed.
Microsoft was also reducing its overseas data center expansion and terminating some U.S. leases for the usage of data centers run by other companies, according to TD Cowen analysts earlier this year.
Some of the changes have been attributed by other analysts for months to a change in Microsoft’s strong partnership with OpenAI.
Craig Ellis, director of research at B. Riley Securities, stated that Microsoft might not have been heading in the same direction as OpenAI, which made it a priority to develop more sophisticated AI systems that need enormous amounts of computer power to train on mountains of data.
On January 21, the two businesses declared that they were changing the contract that had designated Microsoft as the sole supplier of OpenAI’s processing power. This would allow the smaller business to expand its own capabilities, mainly for model training and research. President Donald Trump, who had just taken office, said that OpenAI had partnered with SoftBank and Oracle to invest $500 billion in new AI infrastructure in the United States, beginning with a data center in Texas.
For many years, Microsoft has constructed data centers all over the world to support its cloud computing offerings. As millions of people begin using chatbots and other AI tools at work and home, the generative AI boom increased demand for such facilities, both to train new AI systems and to maintain them in operation.
The computer required to run AI programs is costly and demands an enormous amount of electricity — so much so that Trump used his emergency powers to boost the ailing US coal sector, a dependable but polluting energy source. Tech corporations have also attempted to tap into nuclear power, including a proposed Microsoft-backed restoration of Pennsylvania’s closed Three Mile Island facility, which would supply an electricity grid to data centers in Ohio and Virginia, the country’s largest data center hub.
Microsoft stated that it has already doubled its data center capacity over the last three years and still intends to invest more than $80 billion worldwide to enhance its AI infrastructure this fiscal year, which ends in June.
They will keep growing rapidly and allocating expenditures that remain in line with business priorities and customer demand, while they may pace their plans strategically, Walsh stated.
Local politicians, meanwhile, were disappointed by the Ohio pause.
Licking County has also drawn data center investments from Microsoft rivals Google and Meta Platforms, as well as a much-anticipated semiconductor plant from Intel, though the struggling chipmaker moved the project’s first stage completion date back to 2030.
