China Built Hundreds of AI Data Centers To Catch the AI Boom. Now Many Stand Unused. 64
China's ambitious AI infrastructure push has resulted in hundreds of idle data centers with local media reporting up to 80% of newly built computing resources remaining unused. The country announced over 500 data center projects during 2023-2024, with at least 150 completed facilities now struggling to secure customers in a rapidly changing market.
The rise of DeepSeek's open-source reasoning model R1, which matches ChatGPT o1's performance at a fraction of the cost, has fundamentally altered hardware demand. Computing needs now prioritize low-latency infrastructure for real-time reasoning rather than facilities optimized for large-scale training workloads.
Technical misalignment compounds the problem, as many centers were constructed by companies with little AI expertise, MIT Technology Review reports. The facilities, often built in remote regions to capitalize on cheaper electricity and land, now face obsolescence as AI companies require proximity to tech hubs to minimize transmission delays. GPU rental prices have collapsed, with eight-GPU Nvidia H100 server clusters now leasing for 75,000 yuan ($10,333) monthly, down from peaks of 180,000 yuan, making operations financially unsustainable for many data center operators.
The rise of DeepSeek's open-source reasoning model R1, which matches ChatGPT o1's performance at a fraction of the cost, has fundamentally altered hardware demand. Computing needs now prioritize low-latency infrastructure for real-time reasoning rather than facilities optimized for large-scale training workloads.
Technical misalignment compounds the problem, as many centers were constructed by companies with little AI expertise, MIT Technology Review reports. The facilities, often built in remote regions to capitalize on cheaper electricity and land, now face obsolescence as AI companies require proximity to tech hubs to minimize transmission delays. GPU rental prices have collapsed, with eight-GPU Nvidia H100 server clusters now leasing for 75,000 yuan ($10,333) monthly, down from peaks of 180,000 yuan, making operations financially unsustainable for many data center operators.
Sounds like the .Com crash (Score:4, Insightful)
Re:Sounds like the .Com crash (Score:5, Interesting)
One consequence of the dotcom bubble was the massive buildup of high-speed internet infrastructure that arguably paved the way for the modern internet. It'll be interesting to see what use cases start to make sense with a massive glut in datacenter capacity, even if it doesn't turn out to be AI.
Re: Sounds like the .Com crash (Score:2)
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Every year the computers in the data centers will get less and less relevant.
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As opposed to all the routers and switches installed in the late 90s?
Some of the investment will be in hardware that falls out of date. Some of it will be in infrastructure that can be re-used (buildings, redundant power and cooling). Such is life.
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A large portion of datacentre investment isn't in the computers inside it, and technology doesn't progress anywhere near as fast as you think. Even now in this article the industry is benchmarking on the lowest tier card from the previous generation for their workloads.
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Bitcoin farms
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or foreign hacking & propaganda farms.
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It's the same thing they did with real estate. There are entire cities with no one living in them in China. And they know it will turn out that way. They use the pointless construction jobs to inflate their economic numbers, one of many ways they manipulate the reports on their economy.
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they can't keep that house of cards afloat forever (sorry, mixed metaphors)
there's a crash coming & if it doesn't collapse the government, it may well trigger a return to the Mao years
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The "Mao years" never ended there is still mass genocide and slave labor in China at 1949-1976 levels.
This is exactly the same as the ghost cities anyone thinking otherwise needs to look at the history of the CCP.
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China has pointless construction jobs, just like the US has pointless office jobs. They learned to manipulate the numbers the way they learned everything else - by copying America.
Crash coming, government collapse, cult of the Dear Leader - sounds as much American as Chinese.
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Duke Nukem Forever II (Score:1)
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Like many of the Chinese "ghost towns". The Chinese were lead to believe that real estate investment was it, so China ended up developing cities to house populations of tens of millions of people, and many Chinese bought up apartments and stores as investments.
Of course, build it, but they didn't come, and many of those cities have less than 1% occupancy, so they're more like ghost towns where a car can have a 5 lane highway to themselves, shopping centers and offices are basically full of "FOR LEASE" signs
Seems only logical... (Score:2, Redundant)
China will start using the data centers for Bitcoin mining.
So just like housing (Score:2, Insightful)
Are they going to have a rat renaissance? That's what shitloads of empty buildings usually produce.
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They have wires, which rats love to chew on. Once they chew up all the wires and make a huge mess of the place they'll move on to some other shelter.
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The rats also use buildings for shelter, which they need just like any other animal that lives where the weather requires it.
Rats will also eat wire insulation, PEX water lines, rubber door bottom seals, and a lot of other stuff that isn't food and doesn't provide nourishment. I presume it makes them feel full for a while, and/or is tasty to them. They especially go nuts for PEX.
Re: So just like housing (Score:2)
All the wires are insulated with soy based coating, that's what the rats are attracted to
Re: So just like housing (Score:2)
Rats eat wiring insulation no matter what it is made of, as far as I can tell.
The big problem with soy based insulation is not rodents, it's time. Mercedes proved that. The insulation degrades with time and heat cycles. That's true of all wiring insulation of course, but it's especially hard on the soy stuff.
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Re: So just like housing (Score:2)
Hardly. No food there. Most likely they'll be demolished, like those huge empty ghost towns from a decade ago.
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ghost cities ... "full eventually"? (Score:1)
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Ehh...China's urban population is still growing. The countryside is emptying out (or emptied out...it's all old people and maybe their grandkids).
Despite all of the ignorant bullshit claims (plus their own propagandistic claims) that they are communist, China is ultracapitalistic. They will not let those people move into the empty residential buildings simply because they are empty and will degrade if they are not occupied, they have to pay. In temperate and colder climates, unoccupied buildings breathe in moisture which does damage to property.
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They might mothball them. That's what happened with quite a few coal plants that were built but not needed. If the demand ever comes they can be put into action, although it looks like they will be written off unless something dramatically changes.
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Depends on how well they were constructed and whether they are maintained. Poorly constructed buildings with no maintenance degrade much faster so, after just a few years, the costs of resurrecting exceeds the cost of demolition and rebuild. Given the history of modern China, I'd bet on the latter happening.
Re:So just like housing (Score:4, Interesting)
I assume most of the costs aren't the building but the hardware therein and presumably that'll be out of date within a few years? Mothballing anything but the core building seems like it wouldn't help much.
Selling off that hardware will have interesting consequences too. It'd push down prices which feel good given the tariff wars going on, but it'd also presumably cause huge amounts of damage to the manufacturers as they suddenly have to compete against hardware they sold last year.
My final concern here, while I'm posting to this article, is this: these can't be the only data centers affected, I assume it's a world wide problem. Which makes me wonder if all of this is going to result in even more AI being forced upon everyone, wanted or not, for the same reasons RTO is being forced upon workers - management made purchasing decisions five years ago that turns out to be completely unnecessary and don't want to write it all off as a mistake in front of shareholders.
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Are they going to have a rat renaissance? That's what shitloads of empty buildings usually produce.
Well, it's China, so it's possible that they could be infested by the digital equivalent of rats. Cheap hosting for state sponsored hackers and malware.
What's the message? (Score:4, Insightful)
Since AI research requires lots of hardware for training and the required trial and error approach, is this saying that in contrast the the US, Chinese companies are abandoning AI research and the search for new and better models, and that instead, the Chinese companies believe they've already found the models they need or that someone what will develop those models? Or maybe this is saying that only the largest Chinese companies are doing AI research while the others will just use whatever models are developed by those large companies.
The article seems to suggest two things. First, AI research, particular with LLMs, is indeed decreasing in China. Apparently development plans have to be registered with the government. Second, the decrease in new data centers appears to be a fallout from small cloud providers who were speculating on demand. It's not clear if the Chinese hyperscalers have scaled back their research. Recent news articles suggest that the hyperscalers are instead ramping up their research efforts.
"infrastructure as a national priority" (Score:2)
"The central government designated AI infrastructure as a national priority, urging local governments to accelerate the development of so-called smart computing centers"
And where did the money come from? Mainly from the State.
"State-owned enterprises, publicly traded firms, and state-affiliated funds lined up to invest in them"
Quoting Hemingway... (Score:4, Funny)
Ghost cities (Score:2)
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I read one article saying there are over 3 billion homes in China. There are not 3 billion people. There likely never will be, since the country cannot feed 1.4 billion let alone 3.
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So you might question the source that claimed there were 3 billion homes. Not everything you read is factual.
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Chinese ghost cities, but many (I dare say most)of them actually filled up.
How do you know that? China hides their numbers.
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People mock the Chinese ghost cities, but many (I dare say most)of them actually filled up.
Interesting point but not entirely applicable. Data centers have a much shorter shelf life. After about five years, any compute gear is obsolete. I'd be surprised if power and air handling equipment lasts ten years. Houses and offices are useful for much longer.
The herd is going off the cliff (Score:2)
It will be interesting to see what happens in the US.
Microsoft has already cancelled several data centers. When will the other big players realize that they are building obsolete facilities.
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There are two sides to this though, aren't there? Wasn't it basically shown that DeepSeek was trained against already existing LLM models and was basically a condensed model? If that's true, then there still need to be fully trained "full" models to condense. Maybe it means that we need less fully trained models and therefore less giant data centers, but I don't think it means we need zero.
Too much money in the wrong hands (Score:2)
This is an interesting article as it shows how a lot of investments end up going to waste instead of creating something of sustainable use. No country wants to be left behind the "AI revolution", but it's like investing in beachfront development when it's not clear where the beachfront will be in 2-5 years. All of these buildings have a high CO2 cost ultimately, and governments are for the most part not considering balancing technology investments with sustainability. All of the big powers are in an arms r
Obvious question (Score:2)
That tracks. (Score:2)
Has little to do with AI, and more to do with China's attitude towards stranded assets. They just don't care. Better to overrun a market and build excess than not.
No surprise (Score:2)
This happened in the USA too. There was an article just a few days ago about Microsoft backing out of a bunch of datacenter builds.
OpenAI announced a year ago that they felt that the future for their AI was going to be in efficiency not in bigger hardware. Several Chinese AI models have come out recently that are significantly more efficient.
MOAR POWA is not the future. There is still a need for datacenter growth, but not at the rate it was growing during the past couple years.
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It's kinda too bad. I was hoping to see nuclear power make a big comeback.
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Nelson Muntz voice: (Score:2)
Haw Haw
How much contributed to the Nvidia bubble? (Score:4, Funny)
-timing
Another example of the Chinese cargo cult (Score:2)
This is like China's famous empty cities.
Normally, a city is established in a location because of trade routes, a coast or river, an industry, etc. Over time as the city grows, its land becomes more valuable, until eventually the high price for a square foot/meter is high enough to justify the construction costs of going vertical. When the dirt is so expensive that one must build 50 or 60 floors of office space on a lot in order to justify buying the lot, 50 or 60 story buildings appear. This is the normal