China built hundreds of AI data centers to catch the AI boom. Now many stand unused.
1 min read
Summary
China’s AI development has been mainly driven top-down by local governments and corporations, with most of these projects being started without a genuine need for them or any real technical expertise.
With the rise of Open AI’s ChatGPT, AI model building is done mainly via large language models, making GPU rental much less lucrative explains why many of the country’s new data centres are sitting idle.
Local governments and businesses are being blamed for exacerbating the current crisis by agencies and experts, which is potentially leading to a period of state intervention that may see many of the country’s distressed assets being taken over by more capable operators.
The crisis may be leading to a more mature approach to AI in China, withJimmy Goodrich, senior advisor for technology at the RAND Corporation noting that “The growing pain China’s AI industry is going through is largely a result of inexperienced players—corporations and local governments—jumping on the hype train, building facilities that aren’t optimal for today’s need”.