Big tech companies are running into serious problems as they rush to build the massive computer facilities needed for artificial intelligence, with projects getting canceled, workers losing jobs, and some firms even proposing to move operations into space.
OpenAI’s plan to build a major facility in Britain has ground to a halt months after the company made a big announcement.
The ChatGPT maker said last September it would work with British firm Nscale to set up operations at Cobalt Park in Tyneside, with plans to install roughly 8,000 Nvidia computing chips by early 2026. The facility still hasn’t opened, and OpenAI won’t say when it might start running.
The British project is part of Stargate, a $500 billion program that OpenAI boss Sam Altman revealed in January 2025 during a press event at the White House with Donald Trump. Altman said at the time that building facilities in Britain was part of a “shared vision that with the right infrastructure in place, AI can expand opportunity for people and businesses across the UK.” The company even brought on George Osborne, who used to run Britain’s treasury department, to handle international growth.
But in the United States, discussions with investors like SoftBank have been moving slowly. OpenAI also scrapped plans to expand a Texas site it was developing with Oracle, according to Bloomberg.
Oracle itself is facing a financial squeeze from its own push into AI infrastructure. The company shocked employees on March 31 by sending out termination emails at 6 a.m. The message told workers, “After careful consideration of Oracle’s current business needs, we have made the decision to eliminate your role as part of a broader organizational change. As a result, today is your last working day.”
Estimates of the job cuts range from 10,000 to 30,000 people. The higher number would represent nearly 19% of Oracle’s 162,000 employees. Nina Lewis, who worked in security for 34 years, wrote on LinkedIn that she was among “the 30,000 or so laid off today. Quite a shock.” She noted that “It seems layoffs follow an algorithm of high level individual contributors and mid-level managers – especially those with outstanding stock options.”
The cuts came even though Oracle reported a 95% jump in profits last quarter, bringing in just over $6 billion. However, the company’s stock price has fallen hard, closing at $147.11 on the day of the layoffs, down about 55% from its peak of $326.90 last September.
Oracle signed a $300 billion deal with OpenAI last year to provide computing infrastructure. But the company’s borrowing costs have doubled as banks pull back from financing its expansion plans. One analysis suggests cutting 20,000 to 30,000 positions could save Oracle up to $10 billion.
The problems aren’t limited to a few companies
Research group Sightline Climate found that between 30% and 50% of large AI facilities planned for the United States this year will face delays or get scrapped entirely. The group looked at 140 building projects representing at least 16 gigawatts of capacity scheduled to open by the end of 2026, but only around 5 gigawatts are actually being built right now.
Last year saw similar issues, with 26% of announced capacity getting delayed and another 10% pushed back to later dates. For 2027, plans call for more than 25 gigawatts, but less than 10 gigawatts is currently under construction.
Power supply is the biggest problem. Global electricity use by these facilities hit roughly 415 terawatt-hours in 2024, and the International Energy Agency thinks it could top 1,000 terawatt-hours by 2026. In Virginia, these facilities already consume 26% of all electricity. Ireland could reach 32% by the end of this year.
Getting basic equipment like batteries and transformers has also become difficult, according to Bloomberg.
Some companies are proposing wild solutions
SpaceX filed paperwork on January 30 asking to launch up to one million satellites to create what it called a constellation with “unprecedented computing capacity to power advanced artificial intelligence models.” Seven weeks later, Blue Origin filed for 51,600 satellites in its Project Sunrise.
Starcloud, a startup, raised $170 million in March at a $1.1 billion value and filed for permission to launch 88,000 satellites. Aethero, another new company, raised $8.4 million for similar work.
But scientists say the physics don’t work. Getting rid of heat in space requires about 1,200 square meters of radiator for every megawatt of power. Radiation damages chips.
Communication delays make training AI models nearly impossible. IEEE Spectrum calculated a one-gigawatt space facility would cost upward of $50 billion, roughly three times what a similar ground facility would cost.
Even Altman has called the idea “ridiculous” for this decade, pointing out that launch costs relative to regular power costs “simply does not work yet.”
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This articles is written by : Nermeen Nabil Khear Abdelmalak
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