China builds AI data centres in Inner Mongolia to use cheap power

In short: China is rapidly building AI data centres in inland regions like Inner Mongolia, using cheap electricity, cheap land, and fast construction.

What's going on

China is building many new data centres, the large buildings filled with computers that run online services and AI (think of them as giant server rooms). The Financial Times reports that a major focus is China’s “energy-rich hinterland”, inland areas with lots of electricity and space.

One example is Ulanqab in Inner Mongolia, a remote city known for agriculture. The report says 89 data centres there are built or planned, and about 15 gigawatts of computing capacity has been committed. For scale, a gigawatt is a very large amount of power, roughly like the output of a big power station.

The appeal is practical. Inner Mongolia has abundant wind power, large amounts of coal power, cheap land, and a cold climate that helps cool computers. Electricity for data centres in Ulanqab is reported at about Rmb0.358 per kilowatt-hour, compared with more than Rmb0.60 in many Chinese cities and about Rmb0.80 in Beijing.

Big companies are involved. The FT mentions Alibaba and Huawei, as well as operators like ZData and VNET that build sites and rent computing capacity. Engineers are even converting an abandoned high school into a data centre, with computer racks planned for areas that used to be school grounds.

What to watch

The buildings are going up quickly, but the hardest part may be filling them with the most advanced chips, especially as the US restricts sales of some Nvidia processors to China. In other words, China can build the “warehouses” fast, but it may be harder to get enough “engines” to power AI.

Source: Financial Times