Now, his WeChat feed and trade group chats inform a special story. Traders are extra discreet of their dealings, and costs have come again down to earth. Meanwhile, two data middle initiatives Li is accustomed to are struggling to safe additional funding from buyers who anticipate poor returns, forcing venture leads to unload surplus GPUs. “It seems like everyone is selling, but few are buying,” he says.
Just months in the past, a growth in data middle building was at its top, fueled by each authorities and personal buyers. However, many newly built amenities are actually sitting empty. According to individuals on the floor who spoke to MIT Technology Review—together with contractors, an govt at a GPU server firm, and venture managers—most of the corporations working these data centers are struggling to keep afloat. The native Chinese retailers Jiazi Guangnian and 36Kr report that up to 80% of China’s newly built computing sources stay unused.
Renting out GPUs to corporations that want them for coaching AI fashions—the predominant enterprise mannequin for the new wave of data centers—was as soon as seen as a positive wager. But with the rise of DeepSeek and a sudden change in the economics round AI, the trade is faltering.
“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 know-how to the RAND Corporation.
The upshot is that initiatives are failing, vitality is being wasted, and data centers have turn into “distressed assets” whose buyers are eager to unload them at below-market charges. The scenario could finally immediate authorities intervention, he says: “The Chinese government is likely to step in, take over, and hand them off to more capable operators.”
A chaotic constructing growth
When ChatGPT exploded onto the scene in late 2022, the response in China was swift. The central authorities designated AI infrastructure as a nationwide precedence, urging native governments to speed up the growth of so-called sensible computing centers—a time period coined to describe AI-focused data centers.
In 2023 and 2024, over 500 new data middle initiatives have been introduced in every single place from Inner Mongolia to Guangdong, in accordance to KZ Consulting, a market analysis agency. According to the China Communications Industry Association Data Center Committee, a state-affiliated trade affiliation, no less than 150 of the newly built data centers have been completed and working by the finish of 2024. State-owned enterprises, publicly traded corporations, and state-affiliated funds lined up to spend money on them, hoping to place themselves as AI front-runners. Local governments closely promoted them in the hope they’d stimulate the financial system and set up their area as a key AI hub.