China has spent billions of dollars building far too many data centers for AI and compute - could it lead to a huge market crash?

Wayne Williams

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China’s AI infrastructure boom is faltering, as according to a report in MIT Technology Review, the country built hundreds of data centers to support its AI ambitions, but many are now sitting unused.

Billions were invested by both state and private entities in 2023 and 2024, with the expectation that demand for GPU rentals would keep growing, but uptake has in fact dropped off, and as a result many operators are now struggling to survive.

Much of the early momentum was driven by hype. The government, keen for China to become a global leader in AI, encouraged local officials to fast-track data center construction with the result that more than 500 projects were announced nationwide, and at least 150 were completed by the end of 2024, according to state-affiliated sources. However, MIT Technology Review says local publications are reporting that up to 80% of this new computing capacity remains idle.