Major data center projects from Microsoft, Oracle, OpenAI, and others are expected to miss target opening dates.
Nearly 40% of data centers projects expected to open this year are going to be delayed by at least three months, according to new data.
The Financial Times drew upon satellite imagery from geospatial data analytics company SynMax and cross-checked project progress against public statements and permit documents compiled by the industry research group IIR Energy. The publication’s analysis measured how much progress has been made in clearing land and laying building foundations for each data center project.
The resulting analysis found major delays. Projects from Microsoft, Oracle, OpenAI, and others are “likely to miss completion dates by more than three months.” Construction executives involved with OpenAI projects specifically mentioned not having enough tradespeople, such as electricians and pipe fitters, to work on multiple data center projects.
Next year isn’t looking any better. SynMax estimates more than 60% of projects scheduled for next year have yet to begin construction.
The Financial Times conducted interviews with more than a dozen industry executives, who said construction delays were caused by “chronic shortages of labor, power and equipment” along with the process of securing the necessary permits.
Hyperscalers told a different story, however. OpenAI told the Financial Times: “Our historic data center build-out is on schedule and we will accelerate from here. In partnership with Oracle, SB Energy and a broader ecosystem of partners, we are delivering rapid progress in Abilene, Shackelford County and Milam County in Texas.” Oracle said: “Each data center we’re developing for OpenAI is moving forward on time, and construction is proceeding according to plan.”
Data center construction hurdles
Data center construction is facing growing headwinds from multiple sources.
One is the significant parts and components shortage. The high hardware demands of AI data centers has resulted in a significant shortage of not only GPUs but also memory and storage. Hard drive makers are sold out through the end of this year and into next year, and the cost of memory is rising.
Power is another issue. GPUs are especially power hungry, and the power demands of data centers have gone through the roof. With the current grid unable to support the demands, data center providers are looking to provide their own power, including through modular nuclear data centers.
Another hurdle is growing opposition to data center construction from residents as well as state and local governments. For example, the state of Maine put a pause on all data center construction through next year, and 11 other states are considering a similar ban.
On top of all that, there are serious doubts as to whether or not AI will return the trillions of dollars of investments it has attracted. IBM CEO Arvind Krishna has called into question whether or not all of these massive hyperscale data centers will pay for themselves, and he’s not the only one.
