Microsoft has cancelled its data centre agreement in Loughton, Essex, dealing a blow to Nscale as it pursues a multibillion-dollar Wall Street listing. The US tech giant was set to serve as the anchor tenant for Nscale’s first British facility, agreeing to rent 23,000 high-end Nvidia AI chips at the site.
Microsoft Pulls Plug on Loughton Data Centre
The cancelled agreement forms part of a broader £22bn UK investment package that Microsoft pledged last year during Donald Trump’s state visit, a commitment previously championed by Sir Keir Starmer as a step toward making Britain a world leader in artificial intelligence. Ministers had actively lobbied local councillors to push the Essex development through planning stages. However, the site has faced persistent grid connection delays, with grid bosses warning that they do not expect a power supply until the 2030s. Consequently, Microsoft withdrew from the project, leaving the facility without its only announced customer.
Flotation Plans Face Tech Market Sell-Off
The withdrawal threatens Nscale’s attempts to push ahead with a Wall Street flotation worth up to $35bn (£26bn), arriving amid a broader market downturn for AI computing stocks. Rival infrastructure developers have experienced sharp share price declines as investors question whether debt-heavy neocloud businesses can service obligations amid rising interest rates and inflation. Gartner warned that up to $3.5tn could be written off by 2030 if the artificial intelligence boom fails to deliver projected economic returns. Australian competitor Firmus cancelled a $20bn initial public offering earlier in the month due to adverse market conditions, while peer companies such as CoreWeave and Nebius have watched their valuations slump.
Power Grid Delays Hinder UK AI Infrastructure
Energy constraints and prolonged waits for electrical grid connections continue to impede large-scale artificial intelligence developments across Britain. OpenAI previously suspended plans for a Tyneside facility with Nscale due to high domestic electricity prices. Despite the setback in Essex, Nscale maintains that its broader operations remain stable. An Nscale spokesperson stated that the company stays committed to the Loughton project and other UK expansion sites while exploring alternative power sources, noting that the London-wide grid issue does not affect other contracts. Nvidia chief executive Jensen Huang praised Nscale during a London event, calling the firm potentially the most valuable UK startup created in the past decade.
Frequently Asked Questions
What valuation is Nscale seeking in its planned stock market listing?
Nscale is seeking to raise billions of dollars in a flotation that could value the company at more than twice its current private valuation of $15bn.
How many Nvidia AI chips did Microsoft agree to rent at the Essex facility?
Microsoft had agreed to rent 23,000 high-end Nvidia AI chips as the anchor tenant at the Loughton data centre before pulling out of the agreement.
When do grid bosses expect power to reach the Loughton site?
Grid bosses have informed Nscale that they do not expect a power supply to be available at the Loughton data centre until the 2030s.
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