{"id":535805,"date":"2026-03-14T11:44:08","date_gmt":"2026-03-14T11:44:08","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/535805\/"},"modified":"2026-03-14T11:44:08","modified_gmt":"2026-03-14T11:44:08","slug":"invisible-datacentres-and-capricious-chips-is-uks-ai-bubble-about-to-burst-ai-artificial-intelligence","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/535805\/","title":{"rendered":"Invisible datacentres and capricious chips: is UK\u2019s AI bubble about to burst? | AI (artificial intelligence)"},"content":{"rendered":"

Stargate was to be the world\u2019s biggest AI investment: a $500bn infrastructure project<\/a> to \u201csecure American leadership in AI\u201d. Never shy of hyperbole, its key backer, the ChatGPT-maker OpenAI, promised \u201cmassive economic benefit for the entire world\u201d with facilities to help people \u201cuse AI to elevate humanity\u201d.<\/p>\n

Now, OpenAI appears<\/a> to be dropping out of a part of the deal \u2013 the expansion of a flagship datacentre stretching across a swathe of land in Abilene, Texas, which has become one of the most visible manifestations of a frenzy of investment in the chips and power plants required to build and run AI. There has been a breakdown in negotiations over project financing, as well as the timeline of when the expanded capacity might come online.<\/p>\n

This may be fine for OpenAI; it can presumably find other datacentres. It is less fine for OpenAI\u2019s partner on the project, Oracle, which has already spent billions on hardware for the site. It is one of a number of cracks appearing in the capital side of the AI economy that are making investors rather nervous.<\/p>\n

Both companies have<\/a> said<\/a> the development will not derail their AI plans. They also said that a month ago, when a different $100bn deal<\/a> melted down between OpenAI and Nvidia, the world\u2019s biggest maker of the chips that train AI models and respond to the billions of questions people ask them daily.<\/p>\n

The fate of such deals for the global economy is only increasing in importance. Future datacentre leases agreed by the largest cloud computing companies (including Amazon, Oracle and Microsoft) are up nearly 340% in two years and now top $700bn, according to Bloomberg. It is a lot of money if the technology does not start delivering on its promise to supercharge economic productivity. On Friday, more than three years since the launch of ChatGPT unleashed the AI hype, the UK reported<\/a> zero GDP growth for January.<\/p>\n

Sam Altman, the chief executive of OpenAI, the maker of ChatGPT. Photograph: Bloomberg\/Getty Images<\/p>\n

On Monday, the Guardian exposed<\/a> another fissure in the AI edifice. An investigation found the UK\u2019s flagship AI deals, many announced with great fanfare during Donald Trump\u2019s state visit last September, are not as they were described in government and corporate press releases. Key projects are delayed or improbable, crucial \u201cinvestments\u201d are in fact vague agreements between mostly US tech companies, desperately being spun by ministers as an engine for economic growth.<\/p>\n

If the cracks in this datacentre boom widen, consequences range from Britain ending up without the AI infrastructure it needs to keep up in the global economy to the more grave risk that the entire AI bubble bursts in a replay of the 2001 dotcom crash<\/a> that could knock the world economy sideways.<\/p>\n

\u201cThere has been a lot of blind optimism around the buildout of AI infrastructure,\u201d said Andy Lawrence, the executive director of research at the Uptime Institute, which inspects and rates datacentres. \u201cWhile there is an incredible boom under way, with construction at a scale that\u2019s never been seen before \u2013 it has also been apparent for quite a while that many projects would either not go ahead, or would take a lot longer to build and begin operating than many of the claims suggested. Because of the high stakes and high rewards in AI, it has attracted speculators who promise investment but have little experience in the sector.\u201d<\/p>\n

Most emblematically, the Guardian\u2019s investigation featured a site in Loughton, Essex, that the government said<\/a> would host \u201cthe largest UK sovereign AI datacentre\u201d by the end of 2026. The then technology secretary, Peter Kyle, called it \u201ca fresh start for our economy and for working people\u201d. A year later it was still being used as a scaffolding yard with almost zero chance of being open when billed. After the Guardian\u2019s investigation, Nscale confirmed it had bought the land on which the computer is to be built \u2013 eight months after it said it did<\/a> in January 2025. It still does not have planning permission but said on Friday it was planning to start construction before July and would switch on the datacentre between April and July 2027.<\/p>\n

The site of the proposed datacentre in Essex, pictured in February. Photograph: Martin Godwin\/The Guardian<\/p>\n

The rickety AI deals have come amid a tightening embrace between US tech corporations and senior politicians in the US and UK. Donald Trump\u2019s top AI advisers include David Sacks and Sriram Krishnan, both with recent histories as tech investors. In London, OpenAI hired the former chancellor George Osborne<\/a>; Anthropic and Microsoft employed the former prime minister Rishi Sunak<\/a>; Peter Mandelson was an owner of a consultancy that lobbied for Palantir<\/a>; and the Tony Blair Institute has received funding<\/a> from the foundation of Oracle\u2019s billionaire owner Larry Ellison.<\/p>\n

These figures have helped create an AI policy in which the UK has essentially agreed to be a staging ground for US-designed hardware being rented mostly to US tech companies. The UK government says it is creating \u201csovereign AI infrastructure\u201d, which has a contested definition ranging from hardware and data owned by the UK so it retains control of a piece of critical national infrastructure in a world of unstable international alliances, to the AI minister Kanishka Narayan\u2019s more flexible definition as \u201cstrategic leverage\u201d so the UK \u201ccan ensure ongoing access to critical inputs\u201d.<\/p>\n

In the UK that means relying on the US. As Jensen Huang, the chief executive of Nvidia, said during Trump\u2019s state visit last September: \u201cAmerica must lead across the entire AI technology stack.\u201d<\/p>\n

The former deputy prime minister Nick Clegg put it more bluntly that week, calling the UK a \u201cvassal state technologically\u201d. Clegg this week became a board director at Nscale, the UK company involved in the Loughton AI deal, where its client is Microsoft \u2013 part of the US tech hegemony whose power he lamented six months ago.<\/p>\n

On BBC Radio 4\u2019s Today programme this week, Nscale\u2019s senior vice-president, Imran Shafi, was asked if its Essex datacentre would be live by \u201cQ4 of 2026\u201d as promised. He replied: \u201cThe time that it will be live will be the time we have approved with our customer.\u201d<\/p>\n

Narayan, meanwhile, defended the broader pace of progress. \u201cWhat we are saying is that we\u2019re making concerted progress,\u201d the minister told CityAM<\/a>. \u201cWe have live datacentres in Lanarkshire already. We have spades in the ground in parts of the north-east.\u201d<\/p>\n

Kanishka Narayan, the UK\u2019s minister for AI and online safety. Photograph: Maja Smiejkowska\/Reuters<\/p>\n

Narayan might consider the example of the current meltdown in Texas. Billions were promised, construction began, billions of dollars worth of equipment were bought, and then OpenAI walked out, leaving its partners in the unenviable position of having to find another giant AI company to work with.<\/p>\n

OpenAI, it was reported<\/a>, wanted a newer chip model: and by the time construction in Texas finishes, the hardware that Oracle bought may no longer be cutting-edge. It was like buying a job lot of iPhones just before a far more powerful model was about to be launched. The pace with which chips go out of date casts a further shadow over the UK government\u2019s claims of massive AI investment. It is describing in cash terms \u201cinvestments\u201d that are mostly computer chips. Chips are not money \u2013 they depreciate, possibly even faster<\/a> than most tech companies say they will.<\/p>\n

This means it matters when a datacentre in Essex or an AI hub in Lanarkshire is meant to be online. By the time they are ready and the extra electricity has been sourced, will leaps in the design of AI systems mean that running 2025 chips is like owning a propeller plane in the jet age? Or if the deals announced relate to future chips, will they be available? Iranian drone strikes<\/a> have already affected supplies of helium from Qatar, which chip manufacturers need. What happens if China disrupts supplies from Taiwan?<\/p>\n

\u201cDatacentres, especially the big high-density AI ones, are very complex engineering projects,\u201d said Lawrence at the Uptime Institute. \u201cFew go live in less than two years, and usually it takes much longer. It is not uncommon for some projects to be delayed for years or be indefinitely postponed.\u201d<\/p>\n

The final component here is the banks. Nscale\u2019s chips, and those of other datacentre companies, are leveraged<\/a>. These operators have secured billions of dollars in loans on the basis of their graphics processing units (GPUs). At least in Nscale\u2019s case, this debt will go to financing its UK buildout, but when does that debt come due? If it cannot be paid, what happens to Nscale or to the financial institutions that are left looking to find a buyer for potentially out of date chips?<\/p>\n

A spokesperson for Nscale said it \u201cworks with established financial counterparties and maintains disciplined governance around financing decisions. We take a conservative approach to our financing, aligned to long-term infrastructure buildouts.\u201d<\/p>\n

Alvin Nguyen, an analyst at Forrester, said: \u201cThe people who are loaning the money, the financial institutions, they\u2019re taking on so much more risk because there is a lifespan to the chips.\u201d<\/p>\n

The datacentre investment boom represents one of the biggest infrastructure gambles of this or any era. Whether that scaffolding yard in Loughton ends up becoming a real AI factory could tell us a lot about who will win and who will lose.<\/p>\n","protected":false},"excerpt":{"rendered":"Stargate was to be the world\u2019s biggest AI investment: a $500bn infrastructure project to \u201csecure American leadership in…\n","protected":false},"author":2,"featured_media":535806,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[62,276,277,49,48,61],"class_list":{"0":"post-535805","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-artificial-intelligence","8":"tag-ai","9":"tag-artificial-intelligence","10":"tag-artificialintelligence","11":"tag-ca","12":"tag-canada","13":"tag-technology"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/535805","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=535805"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/535805\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/535806"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=535805"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=535805"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=535805"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}