OpenAI pauses UK data centre project over regulation, costs

By Muvija M

LONDON, April 9 (Reuters) - ‌ChatGPT-maker OpenAI is ​pausing its ​main data centre project in Britain over an unfavourable regulatory environment and high energy costs, dealing a blow to the UK government's push to ‌position the country as a global AI hub.

Microsoft-backed OpenAI, which has emerged ⁠as a leading player following the widespread adoption of ChatGPT, said on Thursday it would proceed with the ‌data centre once conditions were ‌in place to support sustained, long-term investment.

OpenAI launched the Stargate UK project in partnership with Nvidia and Nscale last September, timed to coincide with U.S. President Donald Trump's ​visit to Britain that generated 150 billion pounds ($201.14 billion) of inward investment overall.

Billed by the company as a "major step" forward in the technology partnership between the two countries, ⁠the project was aimed at strengthening Britain's sovereign compute capabilities and supporting faster AI adoption in the UK.

Sovereign compute refers ​to a country's capacity to develop and control its own AI infrastructure.

OpenAI has been ramping up global investment in large-scale data centre ​infrastructure, working with partners such as Microsoft, Oracle and ‌Nvidia to meet surging demand for AI compute.

When asked about the company's decision to pause the UK phase of the project, a government ⁠spokesperson said it was continuing to work with OpenAI and other leading AI companies "to strengthen UK compute capacity".

Prime Minister Keir Starmer, trailing in opinion polls ahead of a national election due by ⁠2029, has placed AI at the centre of his growth strategy to attract international investment and reinvigorate ​a stagnant economy.

Last year, Starmer pledged to take a pro-innovation approach to regulation, which Microsoft has also criticised in the past, along with plans to make public data available to researchers and create zones ‌for data centres.

"We see huge potential for the UK's AI future. London is home to our largest international research hub, and we ‌support the Government's ambition to be an AI leader," OpenAI said.

"We continue to explore Stargate UK ⁠and will move forward when the ‌right conditions such as regulation ​and the cost of energy enable long-term infrastructure investment," it added.

($1 = 0.7458 pounds)

(Reporting by Muvija M and Akash Sriram; Editing by Catarina Demony and ‌Jane Merriman)

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