Microsoft Pulls Out of Nscale U.K. Data Center Following Delays

Microsoft has pulled out of a planned U.K. data center Nscale was building for it, an Nscale spokesperson said, after the cloud provider faced delays accessing power to bring the site online.

The cancellation is likely to weigh on Nscale’s planned public offering this month as investor concerns swirl over whether AI cloud providers can bring in revenue fast enough to pay their debts. Firmus Grid, an Australian competitor to Nscale, abruptly pulled its planned IPO earlier this month, and shares in AI cloud provider CoreWeave fell more than 23% last week.

Microsoft, one of Nscale’s two largest customers, had announced last fall that it planned to spend $15 billion in capital expenditures on new data center capacity in the U.K. by 2028, including on a new campus built by Nscale. But power suppliers recently informed Nscale that the site may not be able to access power until 2030, according to someone familiar with the situation.

Nscale disclosed last month that Microsoft had committed to spend roughly $44 billion with it by 2033, including at facilities in the U.K., Texas, Portugal, and Norway. But Nscale said at the time that its contracts allowed customers to walk away from commitments if they faced construction delays. The Telegraph first reported on Microsoft pulling out of the U.K. site.

“We remain committed to both the Loughton project and the UK and we are exploring alternative power sources for the site, in addition to other expansion sites in the UK,” an Nscale spokesperson said in a statement. “Our relationship with Microsoft remains strong and long-term, and this unfortunate London-wide grid issue has no impact on our other contracts.”

Microsoft declined to comment.