China Built Hundreds of AI Data Centers To Catch the AI Boom. Now Many Stand Unused.

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.

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